Day -v- Harris [2013], Curnock v IRC, Phizackerley

Just a quick reminder to myself that these are the current cases concerned the ability of attorneys to make valid gifts, and the interaction with IHT.

Day -v- Harris 2013 Day v Harris and others Same v Royal College of Music and another (Arnold and another, interpleader claimants) [2013] EWCA Civ 191; [2013] WLR (D) 112 and PDF of judgment concerns a registered EPA – and gifts made by the attorney (who was also a joint holder of a bank account) and whether the gifts that he had made were as attorney for the donor, or in another capacity as being access to the joint bank account as was his right as a joint bank account signatory

In my judgment, it remained open to Mr Day to operate the bank account after registration of the EPA as he had done before such registration. He could not use it to benefit himself without the full, free and informed consent of Sir Malcolm but, if he had that consent, as the judge held he did, gifts made by drawing cheques on the joint account were not invalidated by the effect of section 7(1)(c) of the Act even though made after registration of the EPA.

Had the gifts not been validly made, then they were still part of the donor’s estate for IHT purposes – on the basis of Curnock v IRC, Curnock v IRC [2003] SWTI 1053 where a cheque was not encashed prior to the death of the donor – and therefore the gift was not complete by the time of death.  This could also be seen in conjunction with Phizackerley, Personal Representatives of Phizackerley v HMRC [2007] SpC 591

An earlier version of Day -v- Harris, in 2010 concerned the nature of the accounting to be made for the researches of the executor into the amount of the gifts that were made and how far back the executor should go in attempting to ascertain what gifts had been made, and whether the expenses of the executor in doing so were reasonable.

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Your will can be ignored, say judges.

Your will can be ignored, say judges – Telegraph.

Actually, it might be phrased (verbatim from the judgment)

Parliament has entrusted the courts with the power to ensure, in the case of even an adult child, that reasonable financial provision is made for maintenance only

For the judgments in questionm, the Bailii references are:  Ilott v Mitson & Ors [2015] EWCA Civ 797 (27 July 2015) and the previous judgment of Ilott v Mitson & Ors [2011] EWCA Civ 346 (31 March 2011).

The case centres around the unhappy tale of a mother (Melita Jackson) who, being bereaved whilst pregnant, had her only child, a daughter (Mrs Ilott).  Mrs Jackson, died leaving a will that expressly excluded her daughter from benefit, leaving all her estate to animal charities, despite there being no obvious connection or affection for animals or such charities

There is no evidence that the deceased had any connection with the charities, or that, during her lifetime, she had any particular love of, or interest in, either animals or birds.

Mrs Ilott left home whilst a teenager of 17, to live with Mr Ilott, whom she later married.  Mr Ilott and Mrs Ilott have a very low income, below £5000 a year, have five children, and are entitled to state benefits.  They are eligible to buy their home, under the right to buy legislation.  Their schedules of expenses show a very modest standard of living.

Mrs Ilott and her mother were estranged following the departure from the family home.   Although both parties contributed towards the estrangement, three attempts were made at reconciliation, but none was successful.  The trial judge considered that the evidence showed Mrs Jackson having been

unreasonable, capricious and harsh

towards Mrs Ilott by excluding her from the will, but that on the facts of this case, estrangement ought not to affect the size of the amount awarded.

The latest decision concentrates on the factors to which the court should have regard when considering a claim made under the IPFDA and considers in particular the interconnection between the beneficiaries under a will, and the requirements that they might reasonably expect, and the needs of those who are closely connected to the deceased, and the financial provision *for maintenance* that might be appropriate.  In this case, there was no financial need on the part of the beneficiaries of residue – as charities, this was a windfall.  On the other hand, the daughter had substantial need.   The fact that Mrs Ilott did not have the ability to earn much salary or any pension provision was not considered detrimental:  Mrs Ilott contributed towards society, albeit in her capacity as mother to five children

while she may not have made the choices in life that her mother thought were necessary for her to make a success of her life, she has made a success of her life in other ways through being a mother and homemaker. Third, not only may it be difficult to apportion fault here but there may not have been fault on anyone’s part. Estrangement may simply have been the result of Mrs Jackson’s inability to make lasting relationships with anyone, of which there is other evidence. 

The fact that Mrs Ilott was an independent adult with no disabilities who was not financially dependent on the deceased limited the award that would be given to her.

Mrs Jackson’s obligations and responsibilities to the appellant (section 3(1)(d)):

Ms Stevens-Hoare submits that the ordinary family obligation weighs to some extent in her favour under section 3(1)(d) but she accepts as she is bound to do that the fact that Mrs Jackson had no responsibility for her as an adult child living independently weighs against her.

and:

Mrs Jackson’s testamentary wishes:

Ms Stevens-Hoare submits that the judge was wrong to pay such high regard to the deceased’s testamentary wishes. There was no other beneficiary’s needs to which the court had to pay attention. Since the trial judge had found that it was unreasonable to exclude the appellant, there had to be consideration of reasonable provision. Ms Reed submits that DJ Million was correct to have regard to the deceased’s testamentary wishes: see per Oliver J in Re Coventry dec’d [1980] Ch 461 (“An Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases.”).   In my judgment Parliament has entrusted the courts with the power to ensure, in the case of even an adult child, that reasonable financial provision is made for maintenance only. In my judgment that limitation strikes the balance with the testamentary wishes of the deceased whose estate is used for the purposes of making an award, at least in this case where there is no other claimant apart from the Charities. They have no demonstrated need or expectation.

3 Matters to which court is to have regard in exercising powers under s. 2.

(1)Where an application is made for an order under section 2 of this Act, the court shall, in determining whether the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters, that is to say—

(a)the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b)the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;

(c)the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d)any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;

(e)the size and nature of the net estate of the deceased;

(f)any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased;

(g)any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.

Deed of Variation – getting it wrong, (S142 IHTA)

Deed of Variation – getting it wrong | Withersworldwide.

Referring to the recent case of Vaughan-Jones v Vaughan-Joneswhere a deed of variation was effected in the estate of the husband.  The will of the husband had left assets both to the wife and also to the children.  The amounts left to the children exceeded the Nil Rate Band, and therefore an immediate IHT liability arose on the death.  The deed of variation was completed less than a week before the deadline (before the 2nd anniversary of death) but most importantly, failed to contain the election for Inheritance Tax which arguably was the whole point of the document.

The election for Inheritance Tax is the part of the document that enables, for Inheritance Tax purposes, the deed to be considered as if it was the wish of the deceased, rather than the wish of those who actually inherit.  To fail to include that election makes the document pretty useless – “ineffective”.  The reported case permitted the court to rectify this omission.

The Wither’s article reveals, however, that in the process of arguing the case, it was revealed that the deed of variation was not entered into freely – that the widow (to whom all was transferred so as to secure the 100% spousal relief) and children had participated in the deed in order that the widow would later give the assets back to the children.

A key part of the legistation permitting the election is that it cannot apply where there is any associated financial bargain (or “consideration”) with the election:

142Alteration of dispositions taking effect on death.

(1)Where within the period of two years after a person’s death—

(a)any of the dipositions (whether effected by will, under the law relating to intestacy or otherwise) of the property comprised in his estate immediately before his death are varied, or

(b)the benefit conferred by any of those dispositions is disclaimed,

by an instrument in writing made by the persons or any of the persons who benefit or would benefit under the dispositions, this Act shall apply as if the variation had been effected by the deceased or, as the case may be, the disclaimed benefit had never been conferred.

[F1(2)Subsection (1) above shall not apply to a variation unless the instrument contains a statement, made by all the relevant persons, to the effect that they intend the subsection to apply to the variation.

(2A)For the purposes of subsection (2) above the relevant persons are—

(a)the person or persons making the instrument, and

(b)where the variation results in additional tax being payable, the personal representatives.

Personal representatives may decline to make a statement under subsection (2) above only if no, or no sufficient, assets are held by them in that capacity for discharging the additional tax.]

(3)Subsection (1) above shall not apply to a variation or disclaimer made for any consideration in money or money’s worth other than consideration consisting of the making, in respect of another of the dispositions, of a variation or disclaimer to which that subsection applies.

(4)Where a variation to which subsection (1) above applies results in property being held in trust for a person for a period which ends not more than two years after the death, this Act shall apply as if the disposition of the property that takes effect at the end of the period had had effect from the beginning of the period; but this subsection shall not affect the application of this Act in relation to any distribution or application of property occurring before that disposition takes effect.

(5)For the purposes of subsection (1) above the property comprised in a person’s estate includes any excluded property but not any property to which he is treated as entitled by virtue of section 49(1) above [F2or section 102 of the Finance Act 1986].

(6)Subsection (1) above applies whether or not the administration of the estate is complete or the property concerned has been distributed in accordance with the original dispositions.

(7)In the application of subsection (4) above to Scotland, property which is subject to a proper liferent shall be deemed to be held in trust for the liferenter.

Finance Act 1986 Sch. 19, para. 24,with effect from 18March 1986. 

Health and welfare of an autistic adult and a parent being unsuitable to be a Deputy.

AY v (1) Hertfordshire Partnership NHS Foundation Trust & Ors [2015] EWCOP 36

From the latest 39 Essex Chambers newsletter, a case that strikes my heart as well as professional interest, on the care of an autistic young adult  (X) with severe autistic symptoms

It is broadly accepted by all parties that X suffers from an autistic spectrum disorder and that he has moderate to severe learning disabilities. Dr. Dalton is “confident that [he also has] an illness with affective and occasional psychotic components….probably best characterised as bipolar affective disorder” and this conclusion has not been challenged. The parties’ descriptions of X depict him similarly as largely non-verbal but fully mobile and able to read, write and use an i-pad to assist his communication. All parties agree that he is fully dependent on carers to meet all his personal care needs, food and fluid intake; and that he lacks capacity to litigate these proceedings, and to make decisions about where he lives, how he is cared for and the treatment he receives.

and his mother wishing to remain acting as his Health and Welfare deputy.

The legal case,  is about whether the mother would be the proper person to be the deputy – a role ranking higher in health and welfare terms than a parent, although the parent’s introduction of evidence in the context of proceedings about care for an incapacitated adult is considered as highly important  (“the evidence of the parents is of the utmost importance” in fact finding) MA Local Authority v. M, E and A 014] EWCOP 33.

In this case, sadly, the mother was convinced that the diagnosis of autism resulted from a reaction to vaccines and was influenced by the discredited Wakefield study.  She was further convinced that the vaccinations had triggered inflammation of the gut and that a restricted diet with compensating supplements assisted her son, and this was evidenced by his behaviour.

The mother (perhaps because she had made an emotional investment as well as one of time, not to mention money) was unwilling, it seemed to the court, to accept the more standard treatments and suggested causes for both autism and its effects on the individual.   Despite much work and many reports from leading experts in the field (as opposed to “experts” that the court found fell far below the standards required [1] ), she remained unconvinced that there might be an alternative explanation for the behavioural issues experienced by her son (that he was experiencing the difficulties of an autistic person, rather than caused by inflammation of the gut. “I am amply satisfied from AY’s presentation of her case within these proceedings that she is unable to accept that autism, rather than any bowel condition, is fundamentally the cause for much of X’s behaviour.”

As suggested by the Official Solicitor, representing X, “a person who does not listen to medical experts and work in collaboration with professionals in the best interests of the incapacitated adult is particularly ill-equipped to act as a personal welfare deputy”

The Local Authority saw the Deputy’s view as being restrictive and damaging to the wellbeing of her son.  The revocation of the deputyship order was necessary so that respected clinicians could be allowed to treat the patient, following a more conventional approach to the patient’s situation.  In addition, it was seen that the Deputy’s intervention in the treatment of her son had made his treatment far more difficult than it would otherwise have been, as it involved constant record keeping and other burdens on the carers time “The various e-mail chains included in the hearing bundles amply demonstrate that at times AY’s requests to care staff for information as to what and when X is eating, and how his bowels are functioning, have been excessive and unmanageable”

The comment on this case by 39 Essex chambers:

The Court had no doubt that AY was devoted to X and dedicated to promoting his wellbeing as she saw it. However, the Court was struck by the rigidity of her views and her refusal to accept professional medical advice. Rather, AY continued to pursue her views which worked against X’s best interests and therefore her appointment as welfare deputy was revoked. The revocation of AY’s welfare deputyship meant that she alone would not have authority to make these decisions for AY. However, the Court emphasised that AY was not excluded from the decision making process. The revocation of the deputyship merely restored AY to the usual position for the parent of an incapacitated (adult) child where her views would be taken into account in making any decision in X’s best interests. The Court championed the usual approach of collaborative decision making and in the circumstances agreed with the OS that there was no need to appoint anyone else as replacement welfare deputy. We would emphasise that there will be very many cases in which the appointment of a parent as the health and welfare deputy for a child with profound disabilities is entirely appropriate and correct so as to secure a privileged voice in decision-making. It often comes as a huge – and very unwelcome – shock to parents in such a position to discover that they cease to have any formal role at all in such circumstances when their child turns 18, and appointment as a health and welfare deputy can be very important. This case, though (as with A Local Authority v M) demonstrates the boundaries of the authority that a parent deputy can exercise.

The judgment in full here 

Conclusions, paragraphs 112-116

Diet and treatment

When X’s diet was restricted and he was taking supplements, he remained autistic. At least since the beginning of this year, he has had access to previously restricted foodstuffs , and since July he has had an unrestricted diet, without any noted deterioration in his behaviour or the condition of his bowels. Restriction of diet is an infringement of X’s freedoms; and a requirement to take nutritional supplements is an imposition. In the absence of evidence of positive benefit from either the infringement or the imposition, I consider that neither is in his best interests.

Given the finding that AY will continue to seek testing and administration of 5HTP and nutritional supplements, I am satisfied that it would not be in the best interests of X for AY alone to have authority to make such decisions for X. I am satisfied that instead, it is in his best interests for decisions in respect of X’s diet and treatment to be taken in a collaborative process, after due consultation in accordance with the general approach of the Mental Capacity Act 2005.

Deputyship

AY’s views run counter to the generally accepted approach in respect of treatment for autism, yet she has pursued, and as I have found will continue to pursue, those views to the point of placing unworkable strain on those responsible for X’s day to day care. It follows that I am satisfied that she has behaved, and proposes to behave, in a way which is not in X’s best interests (however much she believes to the contrary.) It is clear that AY’s appointment as welfare deputy has worked against X’s interests, not to further them. I am satisfied that the appointment should be revoked.

I understand that AY will feel the revocation of her welfare deputyship as a blow. It is therefore appropriate to make clear that it should not – and I am confident that it will not – operate to exclude her from contributing to the process of welfare decision–making for her son. Rather, it restores her to the usual position for the parent of an incapacitated adult, as envisaged by those who framed the Mental Capacity Act. AY is clearly a person interested in X’s welfare (as well as being his deputy for property and affairs). Accordingly, wherever it is practicable and appropriate to consult her, any person or body making a ‘best interests’ decision for X must take into account her views, pursuant to section 4(7) of the Act.

There are good indications that “the usual approach” of collaborative decision-making can operate successfully for X. In particular, I note that the parties have been able to agree where X should live; and now that he is there, they have been able to maintain contact arrangements sufficiently well that no restrictions and no orders of the court are sought. With the issues of dietary restriction and supplement resolved by decision of the court, I agree with the Official Solicitor that there is, at present, no need to appoint anyone else as replacement welfare deputy.

[1] “In respect of X, Ms. Hayward’s statement falls a long way short of standards which would be expected of an expert witness. I have no confidence that the “recommendations” she makes are properly based on an informed consideration of his circumstances and medical history. I do not regard Ms. Hayward’s statement as reliable evidence in support of the assertion that X derives any beneficial effect from 5HTP or dietary supplements.”

On a final note, which is a very personal one, the view that the mother was the best person to make decisions for her son, because she knew him best is one that is frequently expressed, perhaps to empower parents, perhaps an overreaction to the “frigid mother” attitudes of the last century.

In this case, it appears that the court has burst that bubble – has clearly stated that the mother is not the best person to take care of her son and that she does not know her son best, and that her approach is not the best one for him,despite clearly being all consumed with the desire to care for him.

Perhaps the mother’s rigidity of view is based on an inability to support other views :  this may indicate an autistic trait in herself.  Perhaps, on the other hand, the support given to parents after diagnosis too often is about empowering the parent to take control, because there are inadequate resources for anyone else to do so.  Who else would have been an unpaid carer for so many years, with such devotion, in the face of so many difficulties?  If life has been hard for this parent, and she is defiant in her opposition to the ideas of others, it is hardly surprising.

Developments in the courts from 2014 | STEP

Developments in the courts from 2014 | STEP.

This is lifted completely from the STEP pages written by Nicholas Le Poidevin QC TEP  (a Barrister at New Square Chambers) and Toby Graham TEP (a Partner at Farrer & Co)

The main interest right now for me is Marley -v- Rawlings, as I wrote about this a little while ago and it had such a bearing on  a case for rectification I was dealing with at the time.

It must be me – because I found a couple of lines in this to be truly amusing.  I wonder whether the writers are entertaining speakers?

Walker -v- Badmin [2014], Testamentary Capacity is a common law issue

Fascinating new case about testamentary capacity and the differences between the Mental Capacity Act test and the old common law test of Banks -v- Goodfellow.

I expect there to be huge amounts of commentary about this, but Araba Taylor certainly seems to have done a good job here:  she has provided enough argument for the judge to be convinced that the MCA does not apply to tests of capacity of deceased persons and the validity of the wills made.

This is quite a massive step – since the Act introduced a new set of distinct tests for capacity, there has been a question over whether the MCA test for testamentary capacity was the same as, or superceded the common law test.  Most textbooks have been decidedly woolly on the subject – saying it was a rephrasing of the common law in modern language – Banks and Goodfellow is quite old now…  (over 140 years) and one might think that our understanding of mental awareness has increased over the intervening years.

This judgment suggests that the MCA test is higher than the common law test – which sets the bar lower – partly because many people who make their wills do so when elderly and infirm, and sometimes when they need the help of others to fully comprehend their circumstances so they can make effective decisions.  And that this cannot have been intended by the lawmakers at the time.

23. A second difference arises from section 3(1), which requires a person to be able to understand all the information relevant to the making of a decision. This, at least arguably, may in some cases require more of the testator than the common law test, which concentrates on whether the will correctly represents the testator’s intentions and his appreciation of the claims to which he ought to give effect, but does not require in all cases that he is able to remember and understand all relevant information. See Banks, above, Fuller v. Strum [2001] EWCA Civ 1879 at [65] and paras. 32-3. below.

24. A third difference is that the effect of section 3(1) read together with section 3(4), if applicable, would render a will invalid if the testator was unable to understand, use or weigh information as to the reasonably foreseeable consequences of the choices open to him, because of the impairment of his mind or brain. Presumably, that would be limited to material consequences, that is consequences which the testator might reasonably be expected to take into account, but this too probably requires more of a testator than the Banks test, at least in some cases.

It seems that the judge here has considered that the common law test should be determinative when considering whether wills are made validly, and that the MCA directions more correctly apply to the statutory wills regime (whereby the Court of Protection sanctions a will that the patient would have made, had they had capacity). This is also relevant when challenging wills, because of the burden of proof that lies with the propounder of the will to prove that any doubts as to validity have been allayed, once a suspicion has been roused.  The MCA presumes capacity, wherever possible.

In addition, the rest of the MCA is all about assisting patients with decision making and autonomy when they are living, rather than examining the decisions that have been made.

The judge in this case wondered whether it was possible for any testator to fully give all considerations to the material consequences of their decisions.  Perhaps some of the decisions made in a will might be dependent on legal advice as to their efficacy.  In the circumstances of this case, the testatrix left a life interest in what she had (which included an unresolved interest in the former matrimonial property) to her partner (remainder children), and then from the residue, she left part to her children and part to her partner.  The partner was of the same generation as the children.  The practical effect of a life interest would mean that her children would be unlikely to benefit in their own lifetimes, but it would be for the grandchildren to benefit in due course.  Was the letter (which may or may not have been written by the testatrix, and probably by her partner, but signed by the testatrix) written to explain the rationale behind the decisions she made enough to show that she had a full understanding of the effect of her will?

In this decision, having weighed considerable evidence, the judge thought that the testatrix’s side letter did show some reflection on the consequences of having a life interest.

As a side note, the judge did consider that it might well have been prudent to seek medical advice at the time of taking instructions, as per Kenward and the Golden but tactless rule…

Woman who disowned mother fails in claim on estate | STEP

Woman who disowned mother fails in claim on estate | STEP.

 

Conduct does affect the way the court views the situation of a child claiming for support under the IPFDA.  And a letter outlining the reasons for excluding a child has significant weight.

In considering the request, the judge was entitled to consider Wright’s conduct toward her mother – Mary Waters had left a letter explaining her reasons for disinheriting her daughter. A key element was that Mary Waters had sent her daughter GBP10,000 to invest on her behalf in 1998, but Patricia Wright later refused to return this money, insisting that it was a gift. In her letter of wishes, Mary Waters stated: ‘My daughter has already taken without my consent GBP10,000 of my savings’.

There had later been a serious falling-out between mother and daughter on other more personal matters. These quarrels culminated in Patricia Wright sending her mother a letter disowning her and wishing her dead, and stating that she did not wish to communicate with her any more. There was no further contact between them.

One might conclude that if mother and daughter had made it up and become marginally less estranged, the IPFDA letter, if unamended, might have been less effective.