Probate

Recent and developments in probate law and practice

Nicola Laver looks at the ‘golden rule’, a failed dependency claim, costs and the inheritance tax residence nil-rate band (NRB) allowance.


About the author
Nicola Laver is a freelance legal journalist/editor, and a former solicitor.

Probate practice has never been the most dynamic area of law, but changes and developments in recent years have, in general, been welcomed by lawyers. Some have afforded a very tangible, positive effect to the work of those ‘on the ground’ : both wills and probate practitioners, and those helping legal practitioners in the effective administration of estates.

A key development is the changes to the rules for same-sex couples which, says Daniel Curran of Finders International, ‘were way overdue and have saved considerable grief and upset’. He says that Finders no longer has to be the bearer of bad news for same-sex couples.

That said, not all developments have been quite so welcome, including, says Daniel Curran, the scrapping by the Government Legal Department (GLD) of will searches before advertising intestate estates as bona vacantia on the GLD website.

He says: ‘One in four cases we work on we subsequently find wills for. This results in a huge and unnecessary amount of wasted time and money for solicitors and ourselves, not to mention the raising of hopes of the families we locate needlessly.’ He would like to see GLD reinstate will searches.

Recent developments
Testamentary capacity

This issue continues to exercise the courts. In a recent case, the court clarified its approach to testamentary capacity and the extent of the so-called ‘golden rule’.

In (1) Burns and (2) Gramauskas (appointed by order to represent in these proceedings the estate of the late Anthony Burns, (deceased)) v Burns [2016]

EWCA Civ 37, the Court of Appeal addressed issues that arose when a solicitor did not adhere to the ‘golden rule’. (The golden rule (defined helpfully in Wharton v (1) Bancroft (2) Bancroft (3) Wharton (4) Fagan (5) Wharton [2011] EWHC 3250 (Ch)) requires that when a testator is elderly or has been ill, the making of a will should be witnessed or approved by a medical practitioner who is satisfied of the capacity and understanding of the testator, and then goes on to contemporaneously record this examination and finding.)

The testatrix made a will in 2003 and another in 2005 leaving her estate equally to her two sons. However, one of the sons challenged the validity of the will on the basis of lack of capacity and want of knowledge and approval. If he succeeded, he alone would inherit his late mother’s half share in her home under the earlier will; the other son already owned the other half share.

At trial, the judge found that the witnesses on both sides lacked impartiality and objectivity, and so he relied primarily on the contemporaneous documents. From around 2003, the testatrix had had a history of confusion and forgetfulness, including a lack of personal care and not attending to her gas cookers and heaters. In November 2004, she first made moves to make a new will, and agreed to mini-mental state examinations (MMSEs), with a view to the provision of care packages and assessments of risk in daily life. She eventually executed her will in July 2005.

The solicitor’s recollections after her death included: ‘The deceased whilst somewhat frail physically was in good mental health and fully understood the nature of the Will and its contents and that the signing of the new Will would revoke the earlier Will she had made’ (para 23). However, though highly experienced, the solicitor did not know of the golden rule - and seemed oblivious to the concept.

The Court of Appeal upheld the trial judge’s ruling that the 2005 will was valid. The judge decided that the MMSEs and other assessments of the testatrix were directed at her care needs and not her testamentary capacity.

However, even though the solicitor did not follow the golden rule, the Court of Appeal found that the judge’s summary of the facts was full. The court found, for instance, that the judge adequately identified the salient criteria for determination of testamentary capacity.

The judge was also entitled to conclude that the deceased had capacity to understand that she was executing the simple will for which she had previously given instructions, and the draft of which she had expressly approved some months earlier. The facts were that the practitioner was an experienced wills solicitor and clearly reached the view that she understood and approved the contents, therefore the judge was entitled to find that the testatrix knew of and approved the will.

What is clear from this ruling is that the golden rule is best practice, not a rule of law. It provides guidance about a means of avoiding disputes. This indicates that where a lawyer does not adhere to the golden rule, such failure will not automatically mean that a will is invalid on the basis of testamentary capacity.

Costs in probate cases

What are the costs implications where a litigant in a contentious probate case acts unreasonably? Contentious probate cases are, by their very nature, expensive and drain an estate of cash.

A precedent-setting High Court ruling, Elliott v (1) Simmonds (2) Tulip (Executor of the estate of Kenneth William Jordan deceased) [2016] EWHC 962 (Ch), illustrates the court’s approach to the costs of probate litigation where a litigant had acted unreasonably. The basic rule is that the loser pays the winner’s costs.

However, the courts can deviate from the general rule in certain circumstances:

In Elliott, the defendant (D) was the testator’s illegitimate child. She entered a caveat to prevent grant of probate being issued, arguing that the will was void for lack of testamentary capacity, want of knowledge and approval, and or undue influence.

However, D made no claim on the estate, and did not challenge the will, even after two years had gone by. Nevertheless, she still insisted on the will being proved in solemn form and cross-examining the witness (ie, the solicitor who prepared the will). T

he court found that she had no reasonable grounds to oppose the will and there was little to be gained from cross examining the witness. A costs order was made against D on the standard basis in the sum of £65,000.

There is a stark lesson here for practitioners advising clients who wish to contend a will or raise a defence under the CPR. They must be reasonable in their claims, and simply relying on a passive defence to stall the proceedings or the administration of an estate will risk severe costs consequences.

Dependency claims

The courts have become increasingly generous towards individuals claiming reasonable provision under the Inheritance (Provision for Family and Dependants) Act (I(PFD)A) 1975. Daniel Curran says that he has seen this in practice: ‘Whilst encouraging settlements is usually fair and welcome, we cannot always contact potential claimants by tracing them in the usual way through conventional certification. This new area of claimants, with uncertain relationships, may prove to extend or increase contested probate matters or pose further risks for insurers who usually issue policies to cover against post-distribution claims.’

In an interesting case, Wooldridge v Wooldridge Case No 3CL1022132, Central London CC, the testator’s wife (W) failed in her dependency claim against his estate. They had been married for 11 years and had a six-year-old child at the time of the testator’s death. The testator also had a son, aged 22, from a previous relationship.

The testator left a homemade will, under which his company was directed to pay W £75,000 a year. However, the gift failed: both sons inherited shares in the business; and W was left with the matrimonial property (free of mortgage) worth up to £4.25m and other assets of £1.6m.

Nevertheless, W brought a claim on the basis that the will failed to provide adequate provision for her: she needed more money to fund her current lifestyle. The court considered the section 3 factors under the I(PFD)A. It found that, on the evidence, W had not convinced the court that the will did not provide adequate provision to meet her needs.

The court said: ‘What is important is to determine whether she did in fact enjoy the lifestyle she refers to in order to be able to decide whether the will does make reasonable financial provision [for W]’ (para 32).

Her claims that they lived an extravagant lifestyle, and that her late husband would have wished her to be left with more than just the property, were not supported by the financial evidence. In addition, the court found that W’s husband may well have intended to leave her more than he, in fact, did under the terms of the will; however, this was irrelevant to the determination the court had to make under an I(PFD)A claim. The court had to determine, objectively, whether the will made reasonable provision for W.

Moreover, it was noted that she was a successful business woman in her own right and could secure lucrative employment. Her needs were assessed at £240,000 pa at most, and the court decided that she ‘has enough’ (para 100).

Inheritance tax increase

Practitioners need now to prepare for the new main residence NRB, which comes into effect on 6 April 2017, and the potential implications for clients’ wills and for deceased estates.* This will apply when a residence is passed, on death, to a direct descendent (including children and grandchildren) and is in addition to the normal NRB of £325,000. It is limited to one main residential property and is being introduced in stages:

The residence NRB is applicable to deaths on or after 6 April 2017; however, if a surviving spouse/civil partner dies on or after that date, the residential NRB of the deceased (even if they die earlier than 6 April 2017) is transferable to the survivor’s estate.

Practitioners should note that there are limits in the case of net estates valued at above £2m at the date of death. 

 

*Visit: www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

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