It has been over a month now since the Supreme Court ruling in the case of Ilott v Mitson, and it seems timely, now the dust has settled a little, to reflect on the case, and some of the implications for charities and the wider sector.
As you may be aware, the case has taken nearly a decade to resolve. It was back in 2004 that Melita Jackson died, leaving her entire estate to charity. She was adamant that her final wishes be honoured, so much so that she left a letter explaining her decisions. She also instructed her executor to defend any claims made against her estate.
Soon after her death, Melita’s estranged daughter Heather Ilott made a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975. Mother and daughter had been estranged for over 20 years after Heather eloped against her mother’s wishes.
At the first hearing, Heather was awarded £50,000 on the basis she had been “unreasonably” excluded from her mother’s will. Since then, the case has gone back and forth between different Courts, with Heather insisting she was entitled to a bigger share of the money. In 2016, the Court of Appeal ruled that Heather should be awarded £160,000 but, finally, on March 15th this year, the Supreme Court overturned this decision and restored the original award of £50,000.
In the judgment, Lord Hughes said: “Charities depend heavily on testamentary bequests for their work, which is by definition of public benefit and in many cases will be for demonstrably humanitarian purposes.”
He went on to say: “More fundamentally, these charities were the chosen beneficiaries of the deceased. They did not have to justify a claim on the basis of need under the 1975 Act, as Mrs Ilott necessarily had to do.”
Money and principle
There have been a range of differing opinions since the judgement. Many have been supportive of the action of the three charities – beneficiaries of the original Will – in appealing the decision of the Court to award money to Heather against her mother’s wishes.
The case however is about more than money, it’s about a point of principle – a long held belief that those who write Wills should be able to do so, confident in the fact that their wishes, whatever they might be, will be fulfilled. The ruling provides welcome clarity by confirming that donors are free to benefit whom they wish and that those final wishes will be respected.
Lessons for charities
There are several actions charities themselves can take to ensure such final wishes are further safeguarded:
1. Legacy professionals
Legacy administration is complex. Charities should ensure that they have appropriately qualified professionals in place to manage legacy administration. This will allow them to ensure that the fiduciary responsibilities of Trustees are carried out, legacy administration adheres to relevant legal frameworks and guidance and that, through sensitive case management and application of appropriate technical knowledge, charity reputations are safeguarded whilst income is optimised.
Charities should ensure that there is appropriate delegated authority in place from the Trustees to the Legacy team to give them the clarity and powers they need to undertake the sensitive and successful administration of legacy gifts.
3. Income recognition
Charities should have clear gift acceptance and audit processes in place to ensure legacy income is accounted for in the most appropriate way. A strong ongoing dialogue between legacy, finance and audit teams will ensure better understanding of specific issues relating to the forecasting, accrual and allocation of legacy funds.
Successful legacy fundraising and administration is the responsibility of the whole organisation. Charity leaders should work to create an organisation wide culture of legacy giving to ensure gifts in wills are promoted and estates administered appropriately.
It’s essential that donors use a qualified professional to draft their will. This will ensure that their final wishes are safeguarded. Charities should encourage supporters to use a solicitor wherever possible. Solicitors also play a critical role in the administration of estates so it’s essential that charities build good working relationships with the legal profession.
6. Family and Friends
To avoid any surprises, charities should encourage supporters to talk to their family and friends about their final wishes. This will provide them with the opportunity to highlight any gifts to charity and explain the reasons behind their decisions if they wish.
In February of this year, The Institute of Legacy Management launched its new Good Practice Guidance, which offers practical guidance on the issues above, and many others.
Chris Millward is CEO at the Institute of Legacy Management.
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