Animal Charities lose out on legacy income after Court of Appeal Ruling

Ilott -v- Mitsonand others

This case highlights thedifficulties charities face when legacies are challenged bydisappointed relatives. Charities must weigh up the potentialcosts of defending any action against their chances ofsuccess. When a large legacy is at stake it is particularlydifficult for trustees who are mindful of their legal duties to actin the charity's interests and maximize the charity's income, butat the same time do not want to be perceived to be "wasting" fundson legal actions. The costs' implications and threat ofadverse costs' orders in connection with claims under theInheritance (Provision for Family and Dependants) Act 1975 can alsobe a concern for charities faced with potential action. Thepublic relations fall-out from these types of cases can also bedetrimental to charities, particularly if the press appear to "sidewith" the disgruntled relatives. Early advice in writing andcareful consideration of the options is therefore essential tojustify the trustees' choses course of action in these difficultcircumstances to protect the charity's position and demonstratethat the trustees have considered all the relevant information,taken advice and complied with their legal duties.

Charities could witnesssmaller incomes from wills following a landmark decision by theCourt of Appeal. The claimant Mrs Ilott successfully challenged thedecision of her mother Mrs Jackson to donate her £456,000 fortuneto Blue Cross, the RSPB and the RSPCA upon her death in 2004. MrsIlott and Mrs Jackson shared a strained relationship prior to theMrs Jackson's death, resulting in Mrs Jackson writing her daughterout of her will and giving instructions to her executors to fightany resulting claim. No other relatives were named in thewill.

Mrs Ilott first contested thedecision in 2007, with a district judge awarding her £50,000. However, a subsequent appeal to the High Court by Mrs Ilott saw areversal of this decision with the court ruling that there shouldbe no award. Upon further appeal to the Court of Appeal, itwas ruled that Mrs Ilott had been left with inadequate provisionbut such provision would have to be decided by a differentcourt.

In the latest appeal, theappellant Mrs Ilott argued that she should have received apercentage of Mrs Jackson's estate as under Section 1 Inheritance(Provision for Family and Dependants) Act 1975 an order can be madeunder s 2 of the 1975 Act if the will does not make reasonableprovision for her.

In determining whetherreasonable provision had been made the court must take into variousdiscretionary factors stated under s 3 (1). In the leading judgmentLady Justice Arden stated that the charities concerned had failedto demonstrate that they had needs to be taken into account ofwhich is a vital discretionary factor under s 3 (1) (c). Instead,she stated that any money they would have received from Mrs'sJackson's estate would be instead "a windfall". This was dueto the charities having no expectation of benefit as the deceasedhad no prior connection with them.

Lady Justice Arden alsosubmitted that the appellant's financial circumstances laid heavilyin her favour which is a discretionary factor under s 3 (1)(a). Mrs IIott had no savings and had been out of employment for 25years whilst bringing up her five children one of whom still livesat home with her. Her husband was previously made redundantand has since brought in only limited part time work. Thefamily are currently residing in a Housing Association property andreceive tax credits. Such circumstances led Lady JusticeArden to rule that even with state benefits, Mrs Ilott's resourceswere at such a low level that they outweigh the fact that theappellant has been an adult living independently for a significantamount of time.

Subsequently, it was ruledthat under the 1975 Act the will failed to make reasonablefinancial provision for the claimant, thus giving the court thepower to order an award of £163,000.

In a joint statement the threecharities concerned and their solicitor James Aspden said that"careful consideration" would be given before deciding whether toappeal to the Supreme Court.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.