Will more children start challenging their parents’ charity legacies?
After a disinherited daughter won her case in the Court of Appeal last week there has been a media frenzy with many saying that testamentary freedom in England and Wales has been further eroded. Many have suggested the result will increase the number of claims by adult children under the 1975 Inheritance Act.
The charity sector, in particular, has expressed concern at the ruling fearing it will cause increased litigation for charity beneficiaries. There is still talk of an appeal to the Supreme Court by one of the charities so one should wait and see.
Before rushing to conclusions, let’s look at the case in more detail.
Heather Ilott, brought a claim against her mother’s estate on the basis that she did not receive reasonable financial provision under her mother’s Will. Ilott’s mother, Melita Jackson, never forgave her daughter for eloping with her boyfriend, at age 17, whom she subsequently married. This caused a complete breakdown of the relationship between mother and daughter. Jackson made a Will in 2002 excluding her daughter and left the residue of her estate to the RSPCA, RSPB & Blue Cross even though she had little connection to these charities.
She also signed a letter of wishes to her executors to fight any challenge to the terms of her Will. Jackson died in 2004 leaving an estate worth £486,000.
Ilott was awarded £50,000 from her first claim in 2007 but this was subsequently reversed. A further appeal ruled in Ilott’s favour again but did not change the amount awarded. Ilott appealed once again claiming the amount awarded would result in her losing her means-tested benefits making her no better off. At the latest Court of Appeal hearing it was ruled that the district judge failed to consider what effect the award would have on Ilott’s financial situation and awarded her £143,000 plus expenses in order to purchase her housing association home. It also awarded her an additional £20,000, which could be paid in installments, to protect her benefits.
Are we right to think the floodgates are now open for more adult children to challenge their parents Will? The answer is No because the 1975 act has always been there for children to make a claim in this manner.
This case is unusual and the judges used their discretion and ruled on the basis that Jackson’s connection to the charities was tenuous while her daughter’s financial position was somewhat dire. Ilott’s QC stated “Heather had an unreasonable, capricious and harsh mother who consistently undermined reconciliation attempts.“
It’s important for individuals seeking to disinherit their children to provide a detailed explanation of why they are excluding their children. This is something Jackson failed to do. Had she done so, the courts may have taken her motives into consideration when ruling.
It is also advisable to build a connection with the intended beneficiaries, particularly if they are charities.
Lifetime planning and use of trusts are also worth considering as they are much more difficult to overturn
Charities receive nearly £2bn annually through legacies so this ruling may have implications on the sector. Several charities have received very negative publicity about their fund raising activities and commercial approach to seeking settlements recently. This case may well force them to consider reviewing how they engage with potential benefactors especially where it is known a testator has children and a trial may be inevitable.
Whether you believe she was a miserable old lady or simply take a view that it’s wrong to choose animal charities over your own children and grandchildren this judgement highlights the need to have the right planning in place as a simple Will on its own doesn’t protect you.