Charities increasingly involved in probate litigation

Legacies are a huge source of income for many charities and are heavily relied on to further charitable aims.

Worryingly, charities increasingly find themselves involved in probate litigation as illustrated by the recent Ilott v Mitson case in The Court of Appeal.  The court’s decision made national headlines not least as it involved three well known charities losing part of the their legacy; The Blue Cross Animal Welfare Charity, RSPB and RSPCA.

What is the reason behind this growing trend and is it limited to charities?

No it is not. Probate disputes are on the increase across the board. High Court claims are relatively rare but for every case where a High Court claim is issued, there may be many others where a dispute is resolved without court proceedings, possibly via Alternative Dispute Resolution (ADR) such as mediation.

The reasons for the growing number of cases include a range of factors including more complicated family structures, the changing family dynamic – increase in remarriages, step families and co-habitation.  The rise is also attributed to the increase in DIY Wills and DIY probate with family and friends taking on the role of executor and in some cases encountering disputes.

What kind of claims are being made?

Disputes essentially arise as to where the deceased’s assets should go.

Claims regularly involve disputes about the validity of a Will, either on grounds of lack of testamentary capacity, undue influence or lack of compliance with correct formalities. In some cases, there is a challenge on the grounds that the testator (the person whose Will it is) did not know and approve the contents of the Will.

Less frequently, but in a not insignificant number of cases, claims are brought questioning whether a signature has been forged, particularly on a homemade Will.

Probate litigation could well be avoided altogether by careful and professional Will drafting.

Other claims include those brought under the Inheritance (Provision for Family and Dependants) Act 1975. Under this Act eligible applicants can make a claim against an estate for reasonable financial provision. Those eligible to claim include, amongst others, the deceased’s co-habiting partner of more than two years standing, children of the deceased person, a person being maintained by the deceased, or a person treated as a child of the family – commonly a step-child.

Given the outcome of the widely reported Ilott case, adult children may now be encouraged to make a claim under the Act if they are in poor financial health and the Will benefits charities.

What can charities do to protect their legacy income?

Probate disputes are predicted to continue to rise in both the numbers of cases and the amount in dispute.  It is however anticipated that the vast majority of those disputes can, with specialist legal assistance, be resolved long before they become part of the High Court statistics for litigated claims.

Tips for early and positive resolution of probate claims:

• don’t ignore the early warning signs and hope that it will go away
• team up with other charities, to give joint instructions and share legal costs
• make an early, thorough risk assessment of the legal merits of the claim
• assess the effect on the charity’s reputation and develop a strategy for managing publicity
• consider opportunities to settle, for example through Alternative Dispute Resolution to resolve a dispute at an early stage without going to court, which can be costly and could impact the overall value of the charitable gift.

We are encouraging anyone making a Will that benefits charities to record in detail strong reasons for their decision and to explain what connects them to the people or organisations that they have included in their Wills.  This will help to avoid circumstances that might lead to a challenge by a disappointed family member.

If you are talking to a donor who plans to leave a legacy to your charity it is wise to make them aware of this and ensure they provide as much clarity as possible for their reasons on leaving a legacy to your organisation.