What happens when a charity get’s caught up in a dispute?

It is common for charities to be named as beneficiaries in a Will but difficulties can arise when a Will is subsequently challenged.

There may be a challenge to the validity of the Will itself, for example on the basis that the person whose Will it is (the Testator) lacked capacity to make the Will (i.e. was not ‘capable’ of understanding what they were doing) or that he or she was unduly influenced to do so. However, perhaps the most common form of claim against an estate is under The Inheritance (Provision for Family and Dependants) Acts 1975. In cases brought under this Act, claimants are entitled to bring a claim against an estate, if they feel that the Will, or The Intestacy Rules, fail to make reasonable financial provision for them. In cases such as these, recent case law has potentially widened the scope for claims by adult children, which could have a knock-on effect for charities. To read more on this, please click here.

All of these claims require specialist advice in order to take a view as to whether to defend the claim, including an analysis of the risks and costs of doing so.

Importantly for charities, however, difficulties can sometimes arise when the terms of the Will are unclear. This could be for example when the name of the charity is incorrect, or gifts appear to be made in favour of charities which have never existed in the form described or have ceased to exist before the death of the person who wrote the Will.

In such circumstances, it is sometimes possible for the doctrine of ‘cy-près’ to be used. The doctrine of cy-près allows the court to amend the terms of a Will as closely as possible to the original intention of the person who wrote the Will. This can be used when the original objective is impossible or impractical to carry out.

The risks for a charity in litigating over an estate have been illustrated in the case of The RSPCA –v- Sharpe & Others in a recent Court of Appeal decision. Charities can take some comfort from the decision of the Court of Appeal, although the Judge at first instance took a rather different view.

The claim itself related primarily to the construction of a Will, in particular the liability for Inheritance Tax. The case related to the estate of George Mason who died on 18 June 2007 and by his Will dated 19 January 2005 left his residuary estate to the RSPCA. The dispute concerned the wording of specific gifts left by Mr Mason in his Will and where the responsibility for Inheritance Tax was to fall.

The Judge at first instance held that the Executors’ interpretation was correct and was highly critical of the RSPCA in bringing the action, indicating that, in his view, the RSPCA should have been grateful to receive the legacy that they did and should not have brought the claim at all. Such was his view of the action brought by the RSPCA that he ordered costs to be paid on an indemnity basis by the RSPCA, which is highly unusual.

The RSPCA however appealed the decision to the Court of Appeal who disagreed with the Judge and overturned the decision as to the construction of the Will. In addition, the Court of Appeal took the view that the RSPCA was entitled to bring the action that it did, in order to clarify the interpretation of the Will. Accordingly the Order for Costs was overturned.

This decision by the Court of Appeal gives some hope to charities that the courts will not consider litigation to be inappropriate where necessary, for example, to clarify the interpretation of a Will. However, it is clearly vital to take advice prior to embarking on any action to ensure that court action is only taken where appropriate

The contents of this article are intended for general information purposes only and shall not be deemed to be, or be constituted to be legal advice. We cannot accept responsibility for any loss as a result of any acts or omissions taken in respect of this article.

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