Will Dispute News - Supreme Court decision in Pitt v Holt and Futter

The Supreme Court (SC) has reached a decision in the appeals in Pitt v Holt (Pitt) and Futter v Futter (Futter) relating to the "rule in Hastings-Bass" (the Rule). The Rule permits discretionary acts by trustees to be set aside where they have failed to take into account relevant considerations, for example that the effect of the exercise of their powers was different from that intended. This rule is important as it had been historically been used to set aside actions taken by trustees based on professional advice which subsequently turned out to be wrong. Facts In the case of Pitt, following advice from financial advisers, monies received from a personal injury claim were transferred into a discretionary trust. Unfortunately, this had unintended adverse inheritance tax consequences, which could have been avoided if the trust had been established differently.  In Futter powers of advancement under a discretionary trust were exercised in accordance with legal advice received which failed to achieve the aim of avoiding capital gains tax. At first instance the judges held that the actions could be set aside relying on the Rule. Court of Appeal HMRC appealed both decisions successfully. The Court of Appeal (CA) decided that the correct extent of the Rule was that, where a trustee does an act which falls within the scope of his power, it may be voidable on the basis that he has failed to take relevant matters into account, but this will only be the case where that failure amounts to a breach of fiduciary duty. The CA held that, while financial considerations will often be among the relevant matters which trustees take into account, if the trustees seek and follow advice from apparently competent advisers as to the implications of the proposed course of action, then they will not generally be in breach of fiduciary duty if the advice turns out to be wrong. Accordingly, in Pitt and Futter the CA held that the trustees had not acted in breach of their fiduciary duties as they had both relied on professional advice on the relevant issues. Supreme Court The SC have now agreed with the CA's decision on the application of the Rule. However, in doing so, they did grant an appeal in the case of Pitt permitting the actions to be set aside on the ground of mistake. The CA held for mistake to operate there must be a "causative mistake" of sufficient gravity, which was to be distinguished from, for example, ignorance or forgetfulness. The "sufficient gravity" test will normally be satisfied when there is a mistake either as to the legal character or nature of a transaction or as to some matter of fact or law which is basic to the transaction.   Consequences such as tax implication are relevant to the gravity of the mistake and whether it would be unconscionable to leave it uncorrected. Summary The CA's decision, which represented a shift in the interpretation of the Rule has therefore been approved and the effect will be to restrict the use of a common method of mitigating claims against professionals who advise trustees on financial and fiscal matters. For more information about our specialist Will dispute team and how we can help you please visit our webiste by clicking here

Will Dispute Case Update - Hawes v Burgess (2013)

This Will dispute case involves a situation that our specialist Will disputes team are commonly asked to advise upon. Specifically, a parent making a Will which excludes one or more of her children.

 

The facts of this case are as follows. In 1996 the deceased made a Will under which her estate was divided equally between her three children.

 

In 2007 one of her children made an appointment for her to attend a solicitor and the deceased made a new Will dividing her estate equally between two of her children.

 

The deceased’s health at the time was declining. However, the solicitor was independent and his attendance note confirmed he believed the deceased had mental capacity. 

The solicitor explained the contents of the Will to the deceased before the Will was executed, but she had not considered it in advance.  The child involved in making the appointment remained in the room during meetings. 

It was found during the trial that inaccurate information had been provided to the solicitor about lifetime provisions made to the excluded child. 

The judge held that the child involved in the arrangements for making the new Will was a ‘controlling force’. Nothwithstanding the involvement of a solicitor, it was therefore found that the deceased lacked "knowledge and approval" of the contents of the Will and it was invalid.

The judge also found that the deceased lacked testamentary capacity according to the test established by the case of Banks v Goodfellow and that the Will was also invalid on this ground.

An appeal was lodged but dismissed.

This case highlights the risks invovled in making Wills excluding close family members, particularly if made late in life with the assistance of someone who stands to benefit. Legal advice from a specialist firm should always be sought before the Will is prepared.

The full judgment can be read : here

Will Dispute News - Proposed changes to the Intestacy Rules

The Government has prepared a draft Inheritance and Trustees Power Bill ("the Bill")following the recommendations of the Law Commission in December 2011.

The Bill proposes a change to the current Intestacy Rules. Under these, where a spouse and children are left behind, the spouse only receives the first £250,000 with the remainder being split into two equal amounts. The first passes to the deceased’s children immediately and the second is held on trust for the children, with the surviving spouse benefiting from these funds during her lifetime.

The change proposed under the new Bill is that the surviving spouse will receive outright:

1. The £250,000 statutory legacy,
2. All the deceased’s personal chattels, and
3. Half the balance of the remaining estate.

The new Bill essentially improves the position for surviving spouses.

It also proposes to widen the ability of claimants to bring Will claims against an Estate under the Inheritance (Provision for Family and Dependants) Act 1975 ("the Act").  Currently, the Act does not extend to parties domiciled abroad but the new Bill proposes that a claim could be brought against the Estate of a non-domiciled deceased under the Act who held property in England and Wales at the time of their death.

The Ministry of Justice has invited comments on the draft Bill before 3 May 2013.  

To view the draft bill click here

Will Dispute Case Update - Turner v Phythian (2013) EWHC 499

This is a very recent Will dispute case where we successfully acted for the Claimant, Lynda Turner, in challenging the validity of the last Will of her Aunt, Iris Wilson.

The Judgment in this case was delivered by Vivien Rose sitting as a Deputy Judge of the Chancery Division on 15 March 2013.

It was her Judgment that the Will of Iris Wilson, which had been prepared by Mr Phythian and left the entire Estate to him and his wife, was invalid on the grounds of lack of testamentary capacity and lack of knowledge and approval.

In relation to ground of lack of capacity, the key finding of the Judge's was that Iris Wilson executed the Will whilst suffering from an affective disorder brought about by her deep grief at the death of her twin brother some weeks previously and the earlier death of her husband.

In this regard, the Judge cited with approval the words of Briggs J in the case of Key v Key (2010) EWHC 408 (Ch).

As regard to the question of knowledge and approval, the Judge found that the Will was prepared in circumstances that ought to excite the suspicion of the Court in accordance with the rules set our in Barry v Butlin (1838) 2 Moore's Privy Cases.

The Judge found that Mr Phythian failed to discharge the burden so raised due to factors including the circumstances that the Will had been made and the fact that Iris Wilson's family, to whom she was very close, had been completely excluded from the Will.

For more information about our specialist Will dispute team and how we can help you please visit our webiste by clicking here

Will Dispute Case Update - Dunhill v Burgin (2012) EWHC 3163

In Will dispute and other trust and estate cases the situation can arise where a settlement needs to be concluded on behalf of a "protected party". A "protected party" is a person who lacks capacity to conduct Court proceedings.

In these situations, for any settlement to be binding, it must first be approved by the Court.

However, what happens if the fact that someone was in fact a protected party is only discovered after the settlement has been concluded?

This was considered in Dunhill v Burgin [2012] EWHC 3163 (QBD). In this case the High Court held that CPR 21.10, which requires court approval of a settlement of a claim by or on behalf of a protected party, applies even if, at the time of settlement, the claimant was not known to lack capacity.

This means that a settlement made without approval will be invalid if a claimant is subsequently accepted to have been without capacity.

See case summary attached.

For more information about our specialist Will dispute team and how we can help you please visit our webiste by clicking here

Will Dispute News

I am pleased to announce that Cripps Harries Hall Partners, Myles McIntosh and Russell Simpson, have both been recognised for their experience and expertise in handling trust and estate and Will disputes in the Citywealth Leaders List 2013.

To access the full list click here

For more information about our specialist Will dispute team and how we can help you please visit our webiste by clicking here

Will Dispute News - Important Changes to Litigation Funding

In recent years it has been possible for solicitors to act for clients in cases, including Will dispute and other Estate claims,  on a ‘no win, no fee’ basis under a Conditional Fee Agreement (CFA). 

If we act for a client in connection with, for example, a Will dispute or inheritance claim under a CFA we are not be paid anything unless and until we have won their case. In that situation, we would be paid our standard charges plus an extra percentage known as the ‘success fee’.  A large proportion of both the standard charges and the success fee would normally be paid by the defeated opponent, leaving our client with little or nothing to pay direct to us out of the money won in the case or from their own resources.

In many cases, clients also bought special ‘after the event’ (ATE) insurance policies to cover the risk of having to pay the opponent’s costs if the claim failed.  The premiums for those policies were usually ‘self-insured’, meaning that they only became payable if the client in fact won the case.  Under the costs rules, that premium could then be claimed, with the other costs, from the defeated opponent.

The Government has, however, decided to change the rules on the recoverability of success fees and ATE premiums.  Where a CFA or ATE insurance policy is signed on or after 1 April 2013, the success fee or insurance premium will not be recoverable from the defeated opponent.  They will be payable by the winning party out of the damages recovered or other resources.

Whilst it will still be possible to have a CFA and/or an ATE policy in many cases after 1 April 2013 it may no longer be in a clients best interests to fund their case in this way.