Controversial will? Advise your clients on ‘statements of reason’

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Earlier this spring STEP hosted the Tax, Trusts & Estates Conference at a number of venues around the UK. Speakers included Stephen Lawson TEP, Chris Whitehouse TEP, Caroline Bielanska TEP, Steven Kempster TEP, Professor Lesley King TEP, and Lucy Obrey TEP.

Stephen Lawson provided a much needed update on the Inheritance (Provision for Family and Dependants) Act 1975, which has already been amended several times.

Under this Act, a will can be contested if the deceased failed to provide reasonable financial provision for someone who is eligible to bring a claim. If successful, the other beneficiaries will receive less than they were originally bequeathed.

Stephen drew our attention to that fact that these claims could sometimes be avoided with a well-written will and an ancillary ‘statement of reasons’ to support its content. This is particularly prudent where the testator is excluding estranged family members from the will. A statement of reasons that has been carefully drafted by the practitioner, and signed by the testator, will have gravitas and will be considered by a judge when deciding whether to award provision.

Inheritance Act litigation is becoming increasingly common due to people’s demanding financial needs, and claimants will often pursue their claim with a ‘no win no fee’ agreement, so they are not financially encumbered. Regrettably, this type of litigation can potentially delay the administration of an estate by up to three years, which seems unfair to the bone fide beneficiaries.

It is therefore essential that practitioners flag the importance of the Act’s ramifications to testators, and discuss who might be entitled to a claim, so that an informed discussion and statement can be prepared to prevent any unwanted litigation.

Stephen provided a summary of some pertinent cases, such as Ilott v Mitson (2015) EWCA Civ 797. In Ilott the statement of reasons was not determinative. With the benefit of hindsight it could be seen that the statement of reasons that had been prepared was based on negative reasons as to why the claimant should be excluded – it did not emphasise positive reasons as to why the other beneficiaries should have received her bounty – as an illustration, if the testatrix had been a lifelong supporter of animal charities this reason could have carried more weight.

In this case, the court could not establish who was at fault for the estrangement. Stephen stressed the importance of providing a concise and objective statement when a potential claimant is being excluded from the will, in case it is challenged later.

Although a well drafted statement cannot be determinative, a court will take it into account when deciding whether a potential claimant has a valid claim.

Emily Deane TEP is Technical Counsel at STEP

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