Contested legacies: a charity perspective

By Kate Harris, Birketts

Claims involving wills and estate are on the rise.

Published in Norfolk Director magazine, Summer|Autumn 2022
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Legal: Birketts LLP

An increase in life expectancy, higher numbers of people diagnosed with dementia-related illnesses, together with the complicated family arrangements that often arise from second marriages and blended families, are all factors that have contributed to a growing number of disputed legacies.

Charities often find themselves embroiled in such cases. More than ever, given the recent economic downturn and its effect on charitable giving, it is increasingly important for charities to secure their legacy entitlements.

Yet how to proceed when facing a claim is not straightforward for a charity named as a beneficiary under a disputed will. There is a multitude of factors that a charity must take into consideration, not least the moral obligation to uphold the wishes of the testator and its own need to protect its reputation.

So, how and when should a charity defend a disputed legacy?

First, any claim relating to the validity or rectification of a will, or for reasonable financial provision pursuant to the Inheritance (Provision for Family and Dependants) Act 1975, can erode or even wipe out a legacy to a charity. Therefore, the charity must give meticulous consideration to the time, costs, and other resources dedicated to defending the legacy and weigh this up against its duty to preserve the funds due to it under the will. This is embodied within the Charity Commission’s guidance on disputed legacies, which clarifies that trustees must act in the charity’s best interests; this includes a duty to protect a legacy under a will.

Here are some top tips for charity trustees to consider when facing a disputed legacy:

  1. Gather together evidence to show why the testator chose to benefit your charity. It will be harder to dispute a legacy with strong lifetime links with the testator.
  2. Identify what the charity will use the legacy income for, and be able to explain how it will be of value.
  3. Consider whether the charity is best placed to file a neutral defence asserting the testator’s intentions and propose mediation at an early stage. This is likely to be both a cost and time effective way of achieving a negotiated settlement of the claim. 
  4. If other charities are involved, consider taking a unified approach and sharing the costs.
  5. Document all decisions taken by the charity together with reasons in the form of a trustee resolution to avoid challenges at a future date.
  6. Consider whether new powers under the Charities Act 2022 (expected to come into force in Autumn 2022) allowing charities to make ex gratia payments up to a certain level without the need for Charity Commission approval, could be used to reach an agreement with a disgruntled beneficiary at a minimal cost.

Contested legacies: a charity perspective 1

If you have any questions about the contents of this article and want to find out how Birketts Contentious Trusts and Probate Team can help you, please contact Kate Harris, Senior Associate of Contentious Trusts and Probate at Birketts LLP
T: 01223 643106
E: kate-harris@birketts.co.uk
Or visit www.birketts.co.uk

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