Essential Trustee - Changes to wills notification service could affect charitable spend


04 February 2019

At the end of January 2019, the Government announced it was to terminate its contract with Smee & Ford, the company that notifies charities of gifts left to them in wills. 

In 2017 alone, Smee & Ford effected notifications for 122,000 charitable bequests found in wills. This service has been invaluable to charities who rely on it to notify them of any legacies in their favour, and use the service to help with forecasting and fraud prevention.

The reason given for the termination of the contract was inconsistencies between the service and HMCTS’ 'legal duties', although exactly what this means has not been made clear. Regardless of the rationale behind the decision-making process, it is undeniable that there will be a number of potentially very serious consequences for charities if a replacement service is not put in place promptly. For example:

Forecasting

With no guarantee of grants or contracts, charities have very unpredictable income streams and the need for realistic and effective charity forecasting is essential. One of the main advantages of the early notification system is that it allows charities to better plan, in advance, how to fund for future projects. The withdrawal of this information stream will make it even harder for charities to predict future income and they are likely to be forced to scale back operations to reflect how much money they currently have in the bank, which will inevitably have an effect on frontline services.

Prevention of mistakes and fraud

The transparent nature of the information provided by Smee & Ford allowed charities to liaise with Personal Representatives at an early stage to ensure charitable legacies were not left unpaid as a consequence of fraud and/or mistake. In the absence of a third party notification service, charities may never know whether or not a testator made a charitable bequest in their favour and the ill-advised or unscrupulous Personal Representative can take advantage of the information vacuum.

Going forward

HMCTS has established a working group with those embedded in the sector to look at future notification models and the requirements of the charity sector generally moving forward. To focus on the positive, this has the potential to ensure that any new service is cheaper to operate because those involved will, no doubt, ask for it to be offered free of charge to charities. 

A new system also provides an opportunity overall to introduce changes to the antiquated probate system, and provide technological solutions which would improve the way this element of the probate and estate administration process works for all parties, including legal professionals. To this end the Law Society has committed to help develop a new system that is better and cheaper than the current system.

In the meantime all those involved recognise that a general lapse in service would be very detrimental to charities and executors, and that any new service needs to be transitioned in smoothly.

If you have any concerns that a charitable legacy is being mismanaged by a third party please do not hesitate to contact our Contentious Trusts and Probate Team

This article is from the April 2019 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. Law covered as at April 2019.

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