Will power

The past year has seen some highly publicised disputed will cases. All have the ingredients for a good news story and in troubled financial times are becoming increasingly common. In the technically complex and emotionally charged world of probate, this has raised the stakes even higher for both practitioners and charities.

The year kicked off with the reporting of Gill v Woodall & Ors [2010] EWCA Civ 1430; [2011] WLR 328. The Gills were farmers in North Yorkshire. On the second death everything was left to the RSPCA with no provision for their only daughter Christine. She and her husband had moved to a property adjoining that of her parents and spent significant time assisting on the farm. Mrs Gill rarely left the house. The court heard that her husband was a bully and prone to outbursts of fury. The evidence in the case lead the court to conclude that, in view in particular of the nature of the Gill's relationship and Mrs Gill's mental condition, she could neither have known nor approved the contents of her will.

The court also accepted a claim of proprietary estoppel by Christine such that even if Mrs Gill's will had been held to be valid she should receive the family farm and the farming business, it being unconscionable for her not to do so.

Wills set aside for undue influence are rare, especially where the perpetrator did not even stand to benefit. This case caused shockwaves throughout the charity legacy fraternity and highlights the difficulties practitioners face when drafting wills for a husband and wife. Practitioners should consider whether it would be better to treat them as separate clients to ensure that the wishes of each are freely given without influence or pressure by the other.

Taxing issues

The case of RSPCA v Sharpe [2010] EWCA Civ 1474 offers practitioners some salutary lessons. This concerned the allocation of inheritance tax. Residue passed to the RSPCA, but with prior gifts to family and friends. The estate was administered on the basis that a gift of the nil-rate band at the time (£300,000) and further gift comprising the property worth £169,000 should both be distributed with all the tax being paid out of the residue. The RSPCA submitted that both of the gifts in the will should be taken into account when calculating the tax thereby reducing the tax burden on residue.

At the original hearing, the judge disagreed and was highly critical of the RSPCA for bringing the case. His view was that the RSPCA's construction would give rise to a result that the deceased would not have intended, even though none of the parties had asserted that extrinsic evidence of those intentions could be admitted.

On appeal, however, this was overturned in favour of the RSPCA '“ not a great surprise to many but this has still resulted arguably in an expensive and damaging court case for the RSPCA and great distress to the family. What is clear, however, is that, although the will was professionally drawn, it was nonetheless far from clear to those reading it after the event '“ something that could have been avoided.

Mental capacity

Ascertaining mental capacity came to the fore in Key v Key [2010] EWHC 408 (Ch). Mr Key, a widower, had made an earlier will leaving his estate to his wife for life and thereafter for his two sons who had worked on his farm all their lives. After the will was made, however, he dissolved the farming partnership with his sons, giving part of the farm to them to farm as their own. He did not change his will.

Almost immediately after their mother's death, one of the daughters on discovering the will took her father to the solicitor's office, where he executed a new will leaving significant legacies to the two daughters with residue divided equally between both the daughters and sons. The sons challenged the will successfully on the grounds of insufficient testamentary capacity and wont of knowledge and approval. One of the medical experts submitted the distressing effects of bereavement could produce symptoms equivalent to severe depression.

The judge openly criticised the solicitor who prepared the later will, stating: 'A significant element of responsibility for this tragic state of affairs rested with him having accepted instructions for the preparation of the 2006 will from an 89-year-old testator whose wife of 65 years standing had been dead for only a week, without taking any proper steps to satisfy himself of Mr Key's testamentary capacity, and without even making an attendance note of his meeting.'

The solicitor had seen the deceased a few months earlier regarding the dissolution of the farming partnership and maintained that he considered the changes for the will appeared to be entirely rational. He was criticised for failing to comply with the 'golden rule' which the judge said had 'greatly increased the difficulties to which this dispute has given rise and aggravated the depths of mistrust into which his client's children have subsequently fallen'.

The Banks v Goodfellow test must be applied to accommodate the mental effects of bereavement as something that can impair testamentary capacity. This case not only reinforces the care that must be taken when taking instructions from elderly clients, but highlights the risk management aspects of will drafting and the need for careful and contemporaneous attendance notes that will stand up to examination if a will is challenged in the future.

Excluded child

H v Mitson [2009] EWHC 3114 (Fam) was a claim by an adult daughter of the deceased under the Inheritance (Provision for Family and Dependants) Act 1975. She received nothing from her mother's will. The defendants and substantial beneficiaries were three animal charities.

On appeal, the judge described the charities' approach as 'pragmatic' and ruled wholly in their favour, removing the lump sum awarded to the daughter by the first instance district judge. She concluded the court should not rewrite a person's will merely because it disagrees with the deceased's reasons for excluding their adult child.

Such would undermine our whole principle of testamentary freedom. Her written judgment explained 'that the district judge may well have thought... that the deceased was unreasonable in her inability to forgive her only child for running away all those years ago and further that she was unreasonable in preferring to leave her estate to a group of charities in which she had shown little or no interest; that is not however the issue'.

These wishes were upheld despite the adult child being in financial need. The deceased had left a detailed note with her will prepared by her solicitor explaining her reasons.

Mutual wills

Another important case did not involve charities but could easily have done. Charles v Fraser [2010] EWHC Civ 2124 is said to be only the third successfully contested mutual wills case in the past 80 years.

Ethel and Mabel were two widowed sisters, neither of whom had children. In 1991 they made wills leaving each other their estates, both providing that on the death of the survivor the assets were to be sold and the proceeds divided into 40 shares to pass to 15 named beneficiaries. Neither will contained any statement to the effect that the wills had been made pursuant to any agreement nor whether they could be unilaterally revoked.

However, there was insurmountable evidence from family members that they had talked about 'the will' and their understanding that, on the death of the survivor, their property would be distributed in shares which were already fixed on the first death.

Mabel died in 1995. In 2006, Ethel, frail and confused, made a new will leaving everything to a friend. She died shortly afterwards. A claim was made by the beneficiaries under the 1991 will to the effect that Ethel Fraser held the estate on a constructive trust for their benefit.

The court gave a useful summary of mutual wills in this case. The judge commented: 'I think it was the plain duty of any solicitor, then as now, faced with two sisters wishing to make reciprocal wills, to ascertain their intentions as to revocation, to advise as to the effect of making mutual wills and to ensure that the agreement the testatrices wished to make was clearly and accurately recorded.'

Failed gift

In Kings v Bultitude [2010] EWHC 1795 (Ch), the testatrix left her residuary estate 'to the person whom at the time of the payment of the same shall be or act as the trustee of the Ancient Catholic Church at present meeting at Rookwood Road, London for the general purposes of the said church'.

By the time the deceased had died, the church's doors were closed. Her executor made an application to determine whether as a result of the failure of the gift her estate was to pass on intestacy or applied cy-pres. The judgment turned on whether or not the purposes of the Ancient Catholic Church had ceased before or after her death.

Care should always be taken to consider the effects of a will if a charitable cause ceases to exist by the time the testator dies.

Under the spotlight

Disputes will undoubtedly rise as financial pressure mounts, not only on families but also charities which may become more dependent on legacy income than ever before. The past year has seen much debate as to whether charities should enter into such high-profile litigation. The costs of litigation are substantial and this is often perceived by the public as one of the least attractive aspects of the law. When those costs come out of charitable funds, headlines are made.

The government's plans for the Big Society, while in its early stages of development, will doubtless offer greater opportunities for charities to become even more involved in public service delivery. The balance between defending and preserving funds yet avoiding alienating the public it serves will become even more crucial as charities become more actively involved in the community.

For practitioners this increased pressure highlights the need for skilful will drafting and all it entails. As is evident from the cases reported this year, the task of will preparation has never been more under the spotlight, and that trend is set to continue.