Animal Charities lose out on legacy income after Court of Appeal Ruling

Ilott -v- Mitson and others

This case highlights the difficulties charities face when legacies are challenged by disappointed relatives.  Charities must weigh up the potential costs of defending any action against their chances of success.  When a large legacy is at stake it is particularly difficult for trustees who are mindful of their legal duties to act in the charity's interests and maximize the charity's income, but at the same time do not want to be perceived to be "wasting" funds on legal actions.  The costs' implications and threat of adverse costs' orders in connection with claims under the Inheritance (Provision for Family and Dependants) Act 1975 can also be a concern for charities faced with potential action.  The public relations fall-out from these types of cases can also be detrimental to charities, particularly if the press appear to "side with" the disgruntled relatives.  Early advice in writing and careful consideration of the options is therefore essential to justify the trustees' choses course of action in these difficult circumstances to protect the charity's position and demonstrate that the trustees have considered all the relevant information, taken advice and complied with their legal duties.

Charities could witness smaller incomes from wills following a landmark decision by the Court of Appeal. The claimant Mrs Ilott successfully challenged the decision of her mother Mrs Jackson to donate her £456,000 fortune to Blue Cross, the RSPB and the RSPCA upon her death in 2004. Mrs Ilott and Mrs Jackson shared a strained relationship prior to the Mrs Jackson's death, resulting in Mrs Jackson writing her daughter out of her will and giving instructions to her executors to fight any resulting claim.  No other relatives were named in the will.

Mrs Ilott first contested the decision in 2007, with a district judge awarding her £50,000.  However, a subsequent appeal to the High Court by Mrs Ilott saw a reversal of this decision with the court ruling that there should be no award.  Upon further appeal to the Court of Appeal, it was ruled that Mrs Ilott had been left with inadequate provision but such provision would have to be decided by a different court.

In the latest appeal, the appellant Mrs Ilott argued that she should have received a percentage of Mrs Jackson's estate as under Section 1 Inheritance (Provision for Family and Dependants) Act 1975 an order can be made under s 2 of the 1975 Act if the will does not make reasonable provision for her.

In determining whether reasonable provision had been made the court must take into various discretionary factors stated under s 3 (1). In the leading judgment Lady Justice Arden stated that the charities concerned had failed to demonstrate that they had needs to be taken into account of which is a vital discretionary factor under s 3 (1) (c). Instead, she stated that any money they would have received from Mrs's Jackson's estate would be instead "a windfall".  This was due to the charities having no expectation of benefit as the deceased had no prior connection with them.

Lady Justice Arden also submitted that the appellant's financial circumstances laid heavily in her favour  which is a discretionary factor under s 3 (1) (a). Mrs IIott had no savings and had been out of employment for 25 years whilst bringing up her five children one of whom still lives at home with her.  Her husband was previously made redundant and has since brought in only limited part time work.  The family are currently residing in a Housing Association property and receive tax credits.  Such circumstances led Lady Justice Arden to rule that even with state benefits, Mrs Ilott's resources were at such a low level that they outweigh the fact that the appellant has been an adult living independently for a significant amount of time. 

Subsequently, it was ruled that under the 1975 Act the will failed to make reasonable financial provision for the claimant, thus giving the court the power to order an award of £163,000.

In a joint statement the three charities concerned and their solicitor James Aspden said that "careful consideration" would be given before deciding whether to appeal to the Supreme Court.

Posted on: 03/08/2015

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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