Why? Sadly everyone is acutely aware that 2020 saw a significant rise in deaths and the predicted total was at the highest level for more than 100 years. Conversely, the number of recorded charitable bequests was around 20% lower than expected owing to the ongoing administrative delays in obtaining a grant of probate. These factors combined are likely to result in a significant rise in the number of charitable bequests being processed in the forthcoming year.
The report also confirmed that the five year outlook for legacy income is positive. Whilst the pandemic has undoubtedly had an impact on the value of legacy income over the last year, legacy incomes are still predicted to reach between £3.6bn and £4bn by 2025. Legacy income is vital to charities, but issues concerning access to information are, sadly, common.
How do you know if your charity is a beneficiary?
Smee and Ford continues, at least for now, to provide a notification service for bequests to charities. For a fee, you can be notified within weeks of a grant of probate being obtained which will not only assist with forecasting but will also confirm vital information such as the names and addresses of those administering the estate so contact can be made at an appropriate opportunity, if necessary. The Government website can also be used to search for a will of a particular individual, once probate has been granted. A copy of the will and probate can be obtained for a fee (currently £1.50).
In theory, a charity should be informed of their legacy by the estate administrators and should be kept appropriately informed. However, information is not always forthcoming.
What information is a beneficiary entitled to?
Your entitlement largely depends upon the nature of your interest.
A testator should stipulate who they wish to benefit from the remainder of their estate, after all other gifts have been made and all liabilities settled. This is known as the residue. The residue can be gifted outright to the beneficiaries or it can be placed into trust. There is no limit upon the number of beneficiaries who can share the residue.
A residuary beneficiary is entitled to see estate accounts so they can understand how their legacy has been calculated, what expenses have been paid etc. A residuary beneficiary is also often asked to approve estate accounts prior to receiving their legacy but this isn’t strictly required and charities should not feel pressured to approve estate accounts when they do not feel comfortable doing so.
It may be reasonable for residuary beneficiaries to seek further information, such as asset valuations to ensure fair value has been received. An executor has discretion as to whether to disclose such information however it would often be considered unreasonable for them to refuse.
Generally speaking, beneficiaries scan request copies of trust documents which set out the terms of the trusts, the identity of the trustees and the assets within the trust. This would therefore include the trust deed, any deeds of appointment/retirement and the trust accounts. If you are solely interested in trust capital, however, you are unlikely to be entitled to information relating to trust income and vice versa.
Beneficiaries are not generally entitled to see any documents pertaining to the trustees’ decision-making process, such as minutes of any trustee meetings. There may however be circumstances where such enquiries are necessary and any requests for information should be carefully considered by the trustees.
Trustees may redact documents such that they are limited to information relevant to the beneficiary making the request, for example by redacting the names of the other beneficiaries There may however be circumstances where you require sight of the redacted information and the trustees have discretion to provide it. Any request for disclosure should therefore be properly considered by the trustees.
A beneficiary has no automatic right to see a letter of wishes which may accompany a trust however, again, the trustees have discretion as to whether to disclose such a letter. Trustees should consider whether disclosure serves the interests of the beneficiaries sand the due administration of the trust.
Pecuniary or specific legacies
If you are the recipient of a pecuniary legacy or specific legacy (i.e. a specific asset rather than money) you would not usually have reason to seek information concerning the wider estate unless you have been informed that the legacy cannot be paid, or cannot be paid in full. The executor should however keep you reasonably informed with regards to progress of the estate administration and when your legacy may be received.
What can be done if information is not being provided?
In the first instance it is recommended that a formal demand for information is made. If the trustees/executors unreasonably refuse to provide the information sought, an application for disclosure and/or an inventory and an account of the trust/estate can be made to court.
The merits of incurring the legal costs of such an application on behalf of the charity should however be carefully considered and only appropriate and proportionate action taken that is in the charity’s best interests.
If disclosure is ordered, the trustees/executors may be asked to meet the charity’s costs but this is not guaranteed. Any costs award is also likely to be subject to assessment which rarely results in a 100% recovery; a rate of recovery of 60-70% is more likely.
In addition to seeking information, if it is considered one or more of the executors/ administrators/trustees are failing to fulfil their duties an application could also be made
to remove and/or replace them. Again, advice should however be sought to ensure that any action is in the charity’s best interests.
If you need any assistance in seeking information, or dealing with troublesome estates/legacies, please contact our Marie McMahon or another member of Birketts’ Contentious Trusts and Probate Team.
This article is from the January 2021 issue of Essential Trustee, our newsletter for charity trustees and senior management. To download the latest issue, please visit the newsletter section of our website. To keep up-to-date with the latest news, legal updates and seminar information, please register and select the areas that are of interest to you.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2021.