This article originally appeared in The Scotsman on Monday 20th March 2017.
Three charities have won a case on appeal to secure the legacies they were entitled to under a deceased woman’s will.
The Blue Cross, the RSPB and the RSPCA had challenged a decision of the English Court of Appeal to give Mrs Melita Jackson’s estranged daughter £164,000 from her late mother’s estate, even although Mrs Jackson had clearly wished her daughter to receive nothing.
Mrs Jackson wrote her last will in 2002 and wrote a letter at the same time setting out why she wished to disinherit her daughter, Heather Ilott. Mrs Ilott had left the family home to take up residence with a boyfriend that her family disapproved of and various attempts at reconciliation failed.
But after Mrs Jackson’s death, Mrs Ilott challenged her mother’s decision to disinherit her through the English courts. A district judge held that she should receive £50,000 from the estate, but the Court of Appeal later tripled that amount. Now, the Supreme Court has ruled that the appeal judges “fell into error” and reinstated the £50,000 awarded by the district court. The three named charities whom Mrs Jackson had wished to inherit her entire estate, therefore, received their legal entitlement barring the £50,000 award to Mrs Ilott.
Succession law in England
The case was of course decided under English law and turned on the rules set out in the Inheritance (Provision for Family and Dependants) Act 1975, but the decision highlights a number of similarities applying on each side of the border. Restrictions on testamentary freedom also exist in Scotland which mean that testators are not always free to deal with their estates as they wish.
The English position under the 1975 Act, and as applied in Mrs Ilott’s case, provides for the right of a child to make a claim for “reasonable financial provision” to be made for him or her from a parent’s estate. The reasonable financial provision is limited to the amount which the claimant ought reasonably to receive for his or her maintenance.
Legal rights in Scotland
In Scotland, the position is framed in a different way. Here, the principle of “legal rights” applies. These are claims which apply in two main situations: a surviving spouse or civil partner can make a claim for legal rights against the estate of their predeceasing partner; and a surviving child can make a claim for legal rights against the estate of a predeceasing parent. In either case, the amount which can be claimed is either one third or one half of the moveable estate (in other words, excluding land and buildings), depending on the relatives left behind by the deceased.
The practical effect of the rules in both Scotland and England is that anyone, including charities, named as a residuary beneficiary in a will may not receive the amount the testator wished them to receive. On neither side of the border are these claims new. The English statute is over 40 years old, and the Scottish rules on legal rights have existed for centuries in one form or another. The current Scottish rules are a combination of common law and the Succession (Scotland) Act 1964.
Mrs Ilott’s case, therefore, highlights that the freedom to disinherit certain relatives has been limited for some considerable time. But it also flags up a key difference between Scots and English succession law. In Scottish cases, legal rights claims do not have any sort of reasonable provision element, as is the case under English law. They are fixed proportions of the estate which can be claimed regardless of the financial need of the beneficiary.
The future of inheritance law
The Scottish Law Commission consulted some years ago on whether Scots law should be amended to allow testators to disinherit non-dependent adult children – a move which many commentators feel would be reasonable in the 21st century but which is likely to be sensitive from a political point of view – but no such change has been introduced so far, and the fixed claims under the legal rights system therefore still apply. Beneficiaries under wills also need to be aware of proposals to extend legal rights to include land and buildings, which could further reduce the amount which would be received in the event of a claim.
Ultimately, charities (along with anyone else who could benefit under a will) need to appreciate that legal rules may apply which can have the effect of over-turning a testator’s wishes and reducing entitlements under a will on death, whether or not that seems fair or reasonable from the testator’s point of view.
Gavin McEwan is a Partner and Head of Charities at Turcan Connell.