Bequests to Charities and Contested Wills: Where to Testamentary Freedom?

Background

In New South Wales, ‘eligible persons’, such as the children of a deceased, may be able to contest a Will by a family provision claim under the Succession Act (2006). Similar provisions apply in other Australian states and indeed other common law jurisdictions. From England comes an interesting precedent established by the UK’s highest court especially as it appears to contrast in some respects with the trend in Australian courts. Challenges to charitable bequests have not just become more common but also the principle of testamentary freedom, the right to leave an estate according to the deceased’s wishes, has itself become more challenged. For example, a report by the Queensland University of Technology found that challenges to charitable bequests, by a deceased’s family members, have become more common as indeed they have in the UK. The report, Family Provision Applications and Bequests to Charity commented: ‘Courts are vigorous in upholding proper family provision as against charitable bequests, portraying the family provision as based on moral obligation. The original purpose of family provision law was to reinforce the proper maintenance and support of a testator’s spouse and children. Testamentary freedom is now seriously challenged’.

However, in a landmark case, Ilott v The Blue Cross & Others (2017), the UK Supreme Court has handed down a judgment which is potentially significant for those making their Will, their prospective beneficiaries and their respective advisors.

Mrs Ilott made an application under the Inheritance (Provision for Family and Dependants) Act 1975 for ‘reasonable financial provision’ from her mother’s estate which had been left to charities. The Act confers the right of a child of a deceased parent to apply for an order if the Will does not make reasonable provision for their maintenance. This case was unusual because Mrs Ilott was an estranged adult financially independent of her mother.

Specifically, the Supreme Court was required to address the question of what responsibilities parents have to their adult children and how to weigh this against the interests of the beneficiaries, in this case three animal charities.

Adult Children Claims for Maintenance v Charitable Bequests

Melissa Jackson left the majority of her £0.5 million estate to animal charities when she died in 2004. She had also instructed her executors to defend any attempt by her daughter to contest her decision. Her adult daughter Heather Ilott, who had been estranged for 26 years, made a claim against the estate arguing her mother had not made sufficient provision for her. A settlement of £50,000 was made by a district judge in 2007 but this was appealed by Mrs Ilott. Mrs Ilott had no pension and lived on state benefits. She had five children, living in a modest way while working as a bookkeeper for her husband who was an actor who worked intermittently.

The Court of Appeal, in 2011, ruled that Mrs Ilott should be awarded £160,000 including £143,000 to buy her home which she rented from a housing association, and payments up to a maximum of £20,000 structured in a way that would allow her to preserve her state benefits. This was criticised by the Supreme Court saying the original judge had taken into account the impact on Mrs Ilott’s benefits and the Court of Appeal had incorrectly said that the cash award could reduce her entitlement to the benefits. The Supreme Court overturned the Court of Appeal’s decision and reinstated the original award.

In his judgment, Lord Hughes said that not enough weight had been given to the deceased’s wishes and the good work that charities could do with the money. Charities depend on bequests to do work for the public benefit and ‘more fundamentally these charities were the chosen beneficiaries of the deceased. They did not have to justify a claim on the basis of need ... as Mrs Ilott necessarily had to’. The judges also suggested children would be entitled to more if they had a close relationship with the parent. They also criticised the law which needed clarifying since it gives no guidance as to the factors to be taken into account in deciding whether an adult child is deserving of reasonable maintenance.

What does this mean for adult children wishing to challenge a parent’s Will?

Charities are heavily reliant on inheritances and there has been an increase in reasonable financial provision type claims, in both the UK and Australia, where they have received funds from an estate.

It is a reminder of the difficulties in balancing competing claims to an estate and the value judgments likely to be necessary in each case.

This case demonstrates, at least in a UK context, that significant weight may be given to the wishes set out in a person’s Will and family relationships do not automatically override the needs of charities who would be expected to use the money for good works in the public interest.

A long period of estrangement between parent and child can be a significant factor.

Testamentary freedom remains a key principle. The wishes of the deceased remain significant and does not cease just because a claimant can demonstrate financial need.

The beneficiaries under the Will do not need to justify their own need for the bequest made to them.

Adult children are less likely to be able to make a claim against a parent’s estate if they are disinherited.

It will be interesting to see what influence the reasoning might have in an Australian context.

Circumstances can vary considerably, of course, and each will need careful consideration of the facts on their merits.

Contact our Expert Wills Solicitors

Szabo & Associates, Solicitors are specialists in the area of Wills, probate and the challenging of Wills. If you are looking to reduce the threat of a successful claim against your estate or you need advice on whether to challenge a Will and potentially bring a claim against a deceased’s estate our Wills, probate and estate team can provide expert guidance. We can also assist you in defending the estate against a claim for further provision. Contact us now on (02) 9281-5088 or fill in our online contact form.