Vucicevic & Anor v Aleksic & Ors [2017] EWHC 2335 (Ch) (20 September 2017)

A home made will that reads like an examination paper on testamentary wishes and the difficulties about expressing them correctly, without the benefit of technical advice.  Including

  • misnaming a charity (and the process to follow if the charity cannot be ascertained)
  • amending a will after the will has been executed (and dependent revocation)
  • executing the will without a date
  • use of the term “money” and ascertaining residue
  • domicile and the conflict of laws and renvoi in relation to overseas property
  • establishment of a trust
  • establishment of beneficial entitlement or charitable trust
  • role of a trustee

 

All this and more – in one case…

 

Source: Vucicevic & Anor v Aleksic & Ors [2017] EWHC 2335 (Ch) (20 September 2017)

 

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Mutual, joint or mirror wills?  Be careful what you wish for.

Legg & Anor v Burton & Ors [2017] EWHC 2088 (Ch) (11 August 2017)

Source: Legg & Anor v Burton & Ors [2017] EWHC 2088 (Ch) (11 August 2017)

Most lawyers specialising in wills or probate would tell you that mutual wills are to be avoided at all costs – the professional bodies that supervise or advise us put out technical notes emphasising this point.

However, as the Judge in this case remarked – “each testator sees only his or her case”.

It is perhaps because we see the cases that go wrong – the arguments about what the deceased would have wanted, that we make the recommendations that we do – it is not that we have the benefit of hindsight (which is very specific to each case) but that we have sufficient experience to know that things do go wrong, even when least expected – the best laid schemes gang aft agley .

In this case, the executors of the last made will of the deceased, had they been personally unaware of the will making history, would have had no indication that the testatrix had been a party to a mutual will – there was no textual evidence of any agreement that had been formed between the testatrix and her late husband – nor was there any confirmation of mutuality in the wills that were first made by the couple.  Having examined the evidence of the witnesses and associates of the couple, the judge in this instance concluded that the will of the husband had been made on the basis of an agreement with the wife that she would not change the will that she was making, after he himself had died- in fact he asked his solicitor to comment on the subject at the time and was reassured by his wife at the time that she would not change it  “My Mother actually heard this comment, and she shouted through from the kitchen ‘No I bloody won’t change it either’…”– a reassurance that he relied upon when executing his will.

The effect of this decision is to reinforce the earlier decision of Re Cleaver deceased [1981] 1 WLR 939 where the fact that two wills had been made in essentially similar, mirror terms did not create mutuality, but mutuality could be found where there was extrinsic evidence

 ‘It is therefore clear that there must be a definite agreement between the makers of the two wills; that that must be established by evidence; that the fact that there are mutual wills to the same effect is a relevant circumstance to be taken into account, although not enough of itself; and that the whole of the evidence must be looked at.

The effect of a mutual will is to bind together the will of one person with another – in the same way that a contract entered into by a person before their death needs to be seen as a prior commitment to the testamentary disposition.

Effectively, this would mean (in this case) that whatever the wife inherited from the husband could not be freely disposed of by her will – that she could not change her wishes.  Had she inherited or earned money subsequent to that will, then that money might have been disposed of, free of the condition of the mutual will.

Having seen a widow who wanted to make changes to her will for taxation purposes, being bound by an earlier mutual will, I know that it is a significant hindrance to the freedom of testamentary expression to limit a couple in this way – it takes no account of how circumstances change – and as change is a constant in itself, it means a kind of testamentary prison.   She professed to have no idea that this was the effect of the will – and indicated her late husband would not have wanted her to be so bound.

I doubt that there will be many who read this – just as as there are correspondingly large numbers of people who happily ask to make a joint will for a couple, without knowing what they ask for.  But if there is a person who has made a joint will (and the other joint testator is still alive and capable of making a will), it would be worthwhile to check with both of them that they realise the significant impact of any agreement – especially one that is written into the body of the will, or in a written form alongside the will, and what its effect is, looking to the future.

I am aware that the imposition of mutuality may seem attractive at first blush – particularly amongst those who have a culture or history of marital obedience.  But it is short-sighted of a legal professional to reach for a mutual will precedent without ensuring there are very clear attendance notes and explanatory letters explaining the effect and restrictions of mutuality.  This is what professionals are for – to give perspective and experience to the task of framing a person’s wishes.  Other solutions, aside from mutual wills, are potentially preferable to this, for all concerned.

Open Letter to anyone who made a Will with HSBC and appointed them as Executors

Open Letter to anyone who made a Will with HSBC and appointed them as Executors.

 

It’s a good letter:  I’m not sure whether whoever reads it realises that it is carefully written and may have taken a good few hours to check and double check, particularly when it refers to the organisation(s) to whom the wills have been sold.  Just as “concerned” means “angry”  and “precise” means”nitpicking in the extreme” in legal terminology, the swathes of what is not said about Simplify and its associated companies speak volumes.

It might seem odd that your executors can sell on the rights to deal with your assets, as the bank have done here.  But this sort of thing has happened, by and large, for professional executors over the years, albeit perhaps not so obviously.  Law firms never die, they just get taken over…  successor firms can prove the wills of the prior firm if the will was drafted that way.  Or encourage the clients to make a codicil (and in doing so, both correct any massive errors in initial drafting and/or update terms).  It is no mistake that the wills stored by a firm are called a “will bank”.  Usually, however, with a whole firm takeover, the wills and live files, the contacts and reputation are all bound up together and described as “good will” valued for a greater or lesser amount than the desks, carpets and computers.  Slightly less clear that your will can be seen as a commodity in itself, for sale to another organisation for a price, whilst still being your own property as a client.

 

Who you choose to be your executors is a personal choice – you might prefer a professional executor because your family do not get on well with each other – or you think that it is too much of a burden for friends to bear.  That’s quite alright for you to make this choice – but as this letter rightly points out – the terms on which you appoint a professional do need to be made clear to you – they will charge for their work – and how they do this should be something you feel comfortable with – these are your assets, after all.

Some professionals are bound by professional codes in their conduct towards the public – solicitors are – you can make complaints to the SRA if you feel you have not been treated in a fair way.  Accountants have a professional body too – it is fair to say that complaints to a professional body can be incredibly damaging to the firm, and so a reasonable amount of time is spent in trying to do the right thing and not get complaints in the first place.

If you are to choose a professional, then it’s a good idea to see what institution regulates them – who is the person that they have to answer to when you are no longer alive to express your concerns – who can your beneficiaries turn to when they think they are being overcharged, or waiting for ages – is there anything or anyone to protect them?

 

The Marriage (Same Sex Couples) Act 2013 (Consequential and Contrary Provisions and Scotland) and Marriage and Civil Partnership (Scotland) Act 2014 (Consequential Provisions) Order 2014

The Marriage (Same Sex Couples) Act 2013 (Consequential and Contrary Provisions and Scotland) and Marriage and Civil Partnership (Scotland) Act 2014 (Consequential Provisions) Order 2014.

 

In answer to a question today about whether a couple that are civil partners today, and planning to convert to marriage need to change their wills:  the effect of the subsequent marriage does not cause revocation (as it did before December 2014).

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.

Budget 2015 and initial thoughts.

Budget statement in pdf from Inland Revenue

Some of the things I think this means.

Terms:

Although this refers to a “main residence nil rate band” the personal representatives can elect for any property owned and lived in by the deceased to count as the residence for this purpose.  The term is not related to the main residence or Principal Private Residence.  Potentially, each spouse could have a separate private residence, therefore.

The residence nil rate band (which if someone else has not already labelled it thus, I shall call it the “RNRB”) can be transferred to a spouse and remain intact.  This applies no matter when the first death occurs, so long as the second death occurs after the start of the tax year 2017-18.

The RNRB might end up, therefore, also being called the TRNRB when claimed on the death of the second spouse. There will be new additional forms to complete in addition to the IHT402 and the IHT217.  There will need to be new evidential burdens to show that a recipient falls within the class of acceptable beneficiaries called “descendants”.

The NRB as we know and love it applies at the current rate until the tax year 2021-2 commences.  It applies to all transfers whether intervivos or on death.

The RNRB applies only where there is a residential property in which the deceased has resided (or the spouse of the deceased???) and where the “proceeds of sale of that property” or the property itself pass to a linear descendant of the deceased (or of the deceased’s former spouse??).  The bits in brackets are where I am less certain of the detail.  One thing is clear – the definition of what is considered “linear descendants” is different from the standard definition of “issue” or “bloodline” since it includes not only the usual adopted children and children of the bloodline but also step children and foster children.

Things I am not sure about:

I don’t understand quite how you can quantify the foster children – but perhaps it is possible to prove that an individual is a foster child or has been one at any date.  Similarly, step children.  But then again, this gives an allowance for those children, rather than penalising them or giving them an entitlement.

I am not sure about the “proceeds of sale” aspect of things.  The Inland Revenue states that identifying what has been the proceeds of sale of a family home and making sure that there is a credit for this will be something that will be the subject of a consultation paper shortly.  Presumably, there is some paperwork required for Inheritance Tax purposes on the sale of a family home – so where downsizing from any home worth less than £2,400,000 is potentially eligible for this – so as to preserve the relief on this home.  This will be something that all conveyancing solicitors will need to know about as well, since otherwise it would not be something that would be mentioned to the client.  Few clients associate the sale of their home with the need to consider how it fits in with estate planning.

Does this now mean that flexible life interest trusts now need to be altered so as to take account of this potential future relief?  A “FLIT” by which I mean a discretionary trust, subject to a prior life interest.  I think it does.  Because the whole flexibility of these relies on the discretionary trust *not* being an individual or descendant.  Time to review these I think, and adjust expectations and drafting accordingly.

I think the new legislation means that (at least initially) if you are worth £2.4 million or more, then this RNRB is useless to you.

I also think this means that if you are selling up so that you can free up capital to make potentially exempt transfers, then you have to weigh up carefully whether doing so means that you will lose out on the RNRB.  The RNRB *only* applies on death, and does not apply to PETS that become chargeable.  Worst case scenario is that you free up funds, give some away to your children and do not survive the seven years.  When I say “some”, I mean if you give away more than one Nil Rate Band’s worth of gifts.  So – PETs will have to be limited to below £325,000 for each individual donor if they are within 7 years of death, or statistically likely to be so.  Or in other words, there is no such limitation, but without advice on the pros and cons, the decision should not be taken without, for example, more seriously considering term life insurance, in the very least.

 

In conclusion:

Possibilities of legal involvement in people’s affairs seem to have increased.  And in a way that doesn’t seem right – why should the taxpayer be hemmed in at every turn?  Why not just increase the whole of the NRB to £500,000 each – and not have this extra complication?  What about those childless couples who want to leave their money to nieces and nephews?  Why is this budget not making it easier for the rich to pay tax, rather than harder for the middle income people to manage the burden of it?  This extra complexity just means more work for the civil servants, more bad luck for the childless, more work for lawyers, more fees for professional advice.   And the extra complexity is not actually needed – it doesn’t close any major loopholes or planning issues where “clever lawyers/accountants” have been finding “loopholes”.

legalchap: Will Aid and the solicitor/non solicitor.

legalchap: Will Aid.

Yes, it qualifies as a rant – but perhaps justifiably.  Other reports on the Law Society Gazette and the Private Client Section 

The whole Will Aid system is built on the idea that lawyers do something good for a month (as if we do not do good  for the rest of the year by providing a good service, albeit for a fee) by waiving their fees for charities.

Actually, it is more like there is a fundraising charity out there, which does all the marketing, then says they will donate the proceeds of the campaign to 8 or 9 charities.  I have not looked too closely about the amount that actually *goes* to the end charities *after expenses*.  Certainly as solicitors, we are expected to pass on the whole of the donation to the charities and not to retain any part of the donation.  We are at liberty to charge an additional fee if the will concerned is more than a “straightforward” will – but then again, few of the people who consult during that period require very basic wills – most being middle class and well provided for.  Almost as if the message about making a will never reaches those for whom it would really be beneficial, like those on benefits, for whom the usual prices for wills would be well outside what they would consider affordable.  And once they are in front of you, charging extra when they have been led to believe that it’s £95 (and no VAT) becomes moderately difficult – some take it as an affront.

The thing is, the most recent slap in the face appears to be that after last years will aid campaign – there were still people who had not made wills and who had missed the boat for that year.  Unwilling to pay the usual prices to solicitors rather than the discounted fee that they would have donated to charity, those enquiring were told that making a will did not require a solicitor, and could be done by an unqualified person.

That is of course true – but the fact that so many solicitors (and the Law Society) have been donating time and expertise pro bono, as well as the risk associated with the work (so covered under the lawyers’ insurance not the charity’s insurance) it seems a bit of a slap in the face.

Why would anyone slap the hand that feeds like that?  Could it be that there is some incentive that is paid to the charity for so many potential clients being referred?  Could it be that the regulatory requirements of the non solicitors are far lower, or that the attention devoted to the clients is of lower quality?  Could it also be that if the non-solicitors retain up to a quarter of the “donation” that this is not in fact, setting both sets of providers on a level playing field?

You give and you give, and then someone else walks off with the prize…  Perhaps it is somewhat naive of solicitors not to expect professional fund raisers to act in this way, if they can get money for the charities thereby.  If chuggers can pursue the elderly so they are desperate enough to commit suicide then this is fairly minor in the scales of the lengths to which fundraisers will go.

Will we do Will Aid this year?  Ho hum….