NOT SUCH SWEET CHARITY

30/08/2011

Every year, millions of pounds gets left to charities via wills. Whereas this money is often well received and greatly needed, a recent legal case has highlighted the complications that can arise from this kind of bequest.

Here, Charles George, wills, probate and trusts solicitor at law firm Rothera Dowson, examines the case of Ilott v Mitson and explores its implications for charitable organisations across the country.

Ilott v Mitson is a Court of Appeal decision under the Inheritance (Family Provision) legislation made earlier this year. Before looking at the case in any detail, it is important to understand the history surrounding inheritance.

Until 1938 there was complete testamentary freedom under English law, meaning that you could basically leave your money to whomever you wanted. However, for the last 70 years, this right is no longer unqualified. 

Parliament enacted Family Provision rules in 1938 to protect wives, unmarried daughters, sons under 21, and disabled children from being cut out of capricious Wills. Parliament later went on to widen the class of applicants to cover all children and most cohabiters, whether dependent or not.

In Ilott v Mitson the court had to decide if 70-year-old Melita Jackson’s Will had made reasonable financial provision for the maintenance of her only child Heather Ilott.

Their relationship was not a good one and mother and daughter had not been in contact for a number of years. When she died, Melita left the bulk of her £486,000 estate to three animal charities - The Blue Cross, RSPB, and RSPCA – having had no previous evident connection with any of them.

The test that the court had to apply is not a subjective one, so it was not a case of questioning if the mother acted reasonably, unreasonably or out of spite. Instead, the court had to ask: “Did Melita’s Will make objective, reasonable financial provision for this claimant from her estate?”. They also had to consider the fact that Heather Ilott was living off state benefits at the time.

The case has involved three trials. In the first instance the District Judge decided that leaving her nothing was not “reasonable provision” and he ordered the charities to hand back £50,000 between them to cover her reasonable future maintenance needs. This meant that the charities were still able to keep a healthy 90 per cent, and without more, the charities would have accepted this judgment. 

Wanting more, Heather appealed to the High Court, with the three charities cross-appealing at the same time. The High Court ruled that the District Judge had asked the wrong questions, and dismissed the claim, putting Heather’s inheritance back to zero. 

So, Heather appealed again. This time the Court of Appeal allowed the appeal, saying that the first Judge had in fact asked the right questions, and answered them correctly. For technical reasons they have now referred the amount of the award back to another High Court Judge to rule on, strongly encouraging all sides to reach an agreement to keep the costs from getting out of hand.

The charities were obviously concerned about the implications of the Court of Appeal’s decision for the charitable sector, and applied to the UK Supreme Court for permission to argue a full appeal in the highest court in the land.  But the Supreme Court have recently said “No”.

There seem to be two distinct views when it comes to cases like this. Firstly, you have those who question why parents should not have an unfettered right to disinherit their children and leave their money to charities if that is what they want to do. However, you also have those who are quick to label the charities as ‘greedy’ for attempting to hang on to what others consider should belong to the blood relatives.

In this kind of situation, the charities are all too quickly positioned as the whipping boys and the press surrounding such cases is often far from positive. The fact is that many charities are highly dependent on legacy income, but many are now worried that it may become open season, with every gift in a Will open to challenge by disappointed beneficiaries. 

Solicitors advising on Will making are usually careful to ask if there’s anyone in the individual’s family who might not like being cut out of their Will. Even a small legacy or share of residue will show that some thought has been given to the possibility of a claim, and will help to stop some applicants in their tracks for fear of a judge branding them as ‘greedy’ as opposed to ignored. 

From a legal stance, I take my hat off to the many charities that have taken the time to clearly state in their legacy literature that people thinking of leaving them money should always think first about family and dependants, and I would strongly urge all charities to ensure that such statements are in place. Of course, the problem is that not everyone reads the literature, or follows such advice even when they do.

It also needs to be remembered that it is certainly not in the best interests of charities to be “used” by people determined to spite a child, especially given the fact that this kind of case results in them having to use vital funds to investigate and resist claims which may not be legally or morally justified.

Despite this fact, I think that we will certainly be seeing more cases like this in the future. There will always be those people who only leave money to charity to teach their ungrateful child a lesson, and no advice from a solicitor will convince them otherwise. Sadly, charities generally will be the losers in instances like this. 

So, whilst the law remains as it is, charities need to make sure they are fully aware of this kind of case, working alongside supporters to offer advice on bequests wherever possible. And, in the meantime, I sincerely hope that charities are not given too much of a rough ride in the press when this type of case crops up again.

For more information please contact Charles George at Rothera Dowson Solicitors. Further details on Rothera Dowson please contact us on 0845 124 4012.