Court of Appeal Decision to Impact Charitable Legacies

A recent Court of Appeal case will raise many eyebrows in the charity sector, especially those charities who rely on a regular legacy income stream.

It concerned a claim under the Inheritance (Provision for Family & Dependents) Act 1975 brought by Heather Illott against her estranged mother’s estate. Her mother, Melita Jackson, died in 2004 leaving her £486,000 estate to three charities –The Blue Cross, RSPB & RSPCA.

The deceased went to great lengths when drawing up her Will (and supporting Letter of Wishes) in 2002 and even instructed her Executors to resist any claims from her estranged daughter – clearly a sign that she was expecting a challenge from her daughter after death.

She was not to be disappointed as in 2007 an initial claim against the estate was made and a District Judge awarded her £50,000. However, this was overturned in 2009 and the three charities were successful in arguing that the District Judge had “erred in law” when awarding her £50,000.

A further appeal by Illott in 2011 restored her £50,000 award but, she then went on to argue that such award would reduce her state benefits and the only effective award was for a lump sum of £143,000, in order that she could purchase her rental property from the local Housing Association. This award, she contended would not impact her state benefit entitlements.

Subject to a possible appeal (to the Supreme Court) by the three charities, Illott was successful in her claim for approximately one third of the estate.

What’s concerning for the charity sector is the willingness of the Court to allow such a claim, stating that the deceased had no prior connection with the three charities concerned (personally, I don’t find that unusual!) and “any money from the estate is a windfall”.

This case will impact on legacy management for the sector, who could be advised to keep full and proper records of donations (in all their forms) to support their case in the event of a claim from an estranged family member.

 

For further information please contact Nigel Shaw or enquiry@garbutt-elliott.co.uk – 01904 464 100