Litigation podcast: contentious trusts and probate

In this second podcast from the Birketts Commercial Litigation Team, Legal Director Maria Peyman and Associate Anna Kelly discuss contentious probate.

Maria Peyman 
Hi, I am Maria Peyman, I am a Legal Director here at Birketts and today I am speaking with Anna Kelly, who is a member of our Contentious Trusts and Probate Team. This is part of the series of litigation podcasts where we give a little bit of an introduction to very specialist areas of litigation, some of which are more headline grabbing than others and in particular, contested trusts and probate is one of those where you only ever read about it when it grabs headlines. Lots of people, families with disputes and money, or where, you know, people have tried to leave it I think I saw one where somebody tried to leave it to the RSPCA or another charity and obviously the heirs were a little bit cross about that. So they tend to be the ones that hit the headlines, I think is that right Anna? 

Anna Kelly 
Oh, yeah, absolutely. I mean, the way I sometimes keep up to date is just looking at media headlines and then trying to work out what actually happened. They are very attention grabbing headlines and I think it is very interesting, because it has family history and people can think, oh, one day that might happen to me. I think that is why it hits home with people.

Maria Peyman 
I think there is an assumption that if somebody has a will then they have a will, and that is it, nothing I can do about it. So what would be the grounds, if I thought there was a problem with a relative’s will or something? What would I need to satisfy in terms of grounds to be able to bring that kind of claim?

How do I contest a will?

Anna Kelly 
Yeah, you are absolutely right. I think one of the key principles of English law is that you can leave your estate to whomever you like, you can leave it to your spouse, or you can leave it to the cat’s home and you have complete freedom to do that, compared to some European countries when there is an element of forced heirship. So for example, spouses and children inherit a certain percentage come what may, whereas English law is different but there is obviously exceptions to that.

If you wanted to challenge a will, on the basis that it was invalid, there are different ways you can do that. One of the key ones is that the Testator, the person who wrote the will, did not have the required mental capacity at the relevant time. For example, they have to understand that when they are making a will that it is actually a will that they are executing and that the purpose of the will is to divide their estate upon death. They have to be aware of roughly what the assets and liabilities of their estate will be so they can work out the approximate value. They have to bear in mind and understand that there are certain people that may expect to inherit. So normally spouses and children and they cannot be impacted by a disorder of the mind is how it is referred to. That means that they cannot understand the process that they are going through. Therefore, lack of testamentary capacity is quite prevalent, because we have an aging population, Alzheimer’s, that is becoming more prevalent and the understanding in terms of capacity is evolving as well. So just because somebody has got dementia and makes a will doesn’t mean that they didn’t have capacity, it just means that you have to be very specific when you’re taking instructions for a will to pinpoint that at the relevant time that person had capacity.

There are quite a lot of responsibilities on solicitors who help prepare wills, especially with elderly clients to take them through that process. So they have very detailed notes that they are not worried about capacity. When that does not happen, and when no consideration is even given at the time whether the testator had capacity, that is when it is somewhat ripe for challenge.

Another way you can challenge it is if the will just was not properly executed. It sets out in the Wills Act, what needs to happen for a will to be valid, it has to be in writing, it has to be signed by the testator two witnesses have to be present when the testator signs and the testator must again realise that what they are signing is binding. So that’s a little bit easier to prove, because, you normally just have to write to the witnesses and check that everything was done properly. That is a bit more administrative, rather than contesting it as much.

We also have undue influence, which I think comes up in the media quite a lot. You know, sometimes maybe a parent has moved in with a child, and they are looking after them and then the other child who is not living with them is suddenly excluded from the Will and there can be allegations of undue influence quite frequently. That is a very serious allegation to make, because you are saying that somebody has essentially coerced the testator into doing something that they would not have done. It cannot just be that you have pestered that person or you have annoyed that person into submission, it has to be that they felt they just simply did not have a choice. It is an incredibly high burden. When cases do go to trial, and it is reported that there is undue influence, that is why it makes the news. It is quite rare and that’s some of the saddest circumstances in family situations when you make those types of allegations, because there’s no coming back from that once you’ve made that allegation, which is why you have to think quite seriously before you put pen to paper in that respect.

Then there’s, you know, sometimes witnesses signatures can be forged, which would link into whether the will has been validly executed. Sometimes the actual testator’s signature has been forged. You know, you can have people like handwriting experts to look into that if necessary but there are all sorts of ways that you can challenge a will. You just have to be very careful to make sure you have some evidence to back it up, rather than you are just disappointed that you are not in the will.

Can I contest a will if I believe I am entitled to more?

Maria Peyman 
I think that is probably one of those key points isn’t it. It was expressed to me when I was first training, that there is no expectation. So because of the way that English law is, you can have no expectation that anyone will leave you anything, much as you might hope they will, or that your Granny loves you very much, and maybe more than any of the other grandchildren. It is not a guarantee. But this kind of, I think the point you are making, as well is it is there for the right purposes, but you cannot just contest a will on thin air and a hope I suppose. 

Anna Kelly 
Yeah, exactly. There are mechanisms that protect the testamentary freedom, but equally there are exceptions, because the courts and Parliament accept that it is not just as clear as writing a will and that’s done and dusted.

Is it expensive to contest a will?

Maria Peyman 
Is it expensive to contest a will? Because it kind of sounds like it might be?

Anna Kelly 
Well, as you know, in litigation, it is never a particularly cheap option. I think what I struggle with in my own personal life, I am somebody who likes to plan, I have a schedule, and I like to know how much things are going to cost. So when people ask me, what is the worst-case scenario? I really wish I could tell them, because I think that would provide so much comfort, but as you know, it very much depends quite a lot on how the other side react. That is the only thing as a litigator that you have zero control over. I mean, all I would say, all litigators, encourage alternative dispute resolution. So to try to reach an early settlement. I think, in contentious probate, we maybe push harder for that than some other departments on the basis that if you want to try to retain that family relationship, it is much better and much more likely that that can be achieved if you can reach a settlement without it going before the court. Because once you are at court and you have barristers cross examining family members, you have reporters in the courtroom thinking this is going to make a great juicy headline, you are not going to be having family dinners at Christmas anymore.

I think that we push for early settlement quite a lot and quite early on and in that way, we can keep costs lower. Equally, there are different scenarios where we can try to negotiate the costs are paid out of the estate generally. Whereas obviously, other types of litigation they do not have that option. If it does go to trial, and you have heirs costs involved, you know, it does get very, very expensive, which is why it is sensible for both parties to try to explore early settlement, but you can only control your side.

Can you contest a probate if there is no will?

Maria Peyman 
Well, I am not sure you can control them. You can help guide them and help guide you. It is one of the things that you read about regularly is how few people (and solicitors equally fall into this category) actually have wills. So if there isn’t a will, can you still contest a probate? Because I know, there are rules that apply where you do not have a will sort of those rules of intestacy? How does that impact upon your ability to raise an objection or a complaint?

Anna Kelly 
Yeah. So if somebody has passed away without a will, and the intestacy provisions kick in, it kind of goes through the tree of whose next of kin almost. Especially with blended families that can leave family members slightly disappointed because they do not meet the criteria of the intestacy rules. So you could not claim that somebody lacked capacity to make a will because they just did not. However, what you would be able to look into is an Inheritance Act claim. The full legislation is called the Inheritance Provision for Family Independence Act 1975, sometimes referred to as the Inheritance Act, sometimes referred to as the 1975 Act. That is available for anybody who is either not included within the will or under the terms of an intestacy or do not get enough, which they think they need for their financial provision. That is an option for people when there is no will, and you cannot claim any of the other aspects.

In what circumstances would you look at the Inheritance Act as opposed to contesting a will?

Maria Peyman 
So you have mentioned the Inheritance Act, in what circumstances would you look at the Inheritance Act, as opposed to contesting a will or whatever it may be?

Anna Kelly 
Yeah, I think, quite often, if you have suspicions that somebody lacked capacity or undue influence, but you do not quite have enough evidence to be able to go down that route and either you do not receive enough from the estate or you do not receive anything, then the Inheritance Act is a good option for people. There are certain groups of people who are entitled under the Inheritance Act to make a claim against the estate. The main ones are spouses and civil partners, former spouses and civil partners, if they have not remarried. If you have been cohabiting with somebody, almost as if you were not man and wife for two years prior to death, children of the deceased, both adult and minor children, adopted children are included. And if you are treated as if you were a child of the deceased so that’s quite often step parents or grandparents who took on the role of being the main caregiver, then they are all entitled to advance an inheritance act claim and basis for doing so is that they’ve not received reasonable financial provision from the estate.

So with spouses, it’s a higher standard that you’re entitled to under the Act, because you are entitled to continue the standard of living, you were living as if your spouse was still alive. So if you had a fairly nice house, if you went on holidays, if you had a lot of disposable income, then the court look at it and say well, really, you shouldn’t have been prejudiced because your spouse has passed away. Equally, they then look at what would have happened if you and your spouse had divorced. The starting point is normally 50/50 and they take that, that look when they assess spousal claims under the Inheritance Act, whereas all of the other potential claimants under the Act are restricted to a lower standard, which is just what do you need for your maintenance. The courts are saying, look, it is not there to just pay off all of your debts, to buy you a house outright, and to just do whatever you like to get through life. It has to be this is what you need for your day-to-day expenses, to be able to meet your needs.

So you can see how claims by spouses are often successful. Minor children are successful because nobody really doubts that you have obligations to your children at least until they reach 18. However, quite a lot of adult children seek to advance claims under the 1975 Act on the basis that I think people accept that Mum and Dad can leave their estate to whomever they like, but a large part of you just thinks you are going to get something. When that does not happen, it can be very disappointing and it can have, I think, quite an emotional reaction in you that, oh, gosh, didn’t they love me as much as so and so. So people almost feel entitled, and I do not mean that harshly at all, because I think it is almost natural to think that your Mum and Dad would want to do that for you. However, if you are financially independent, if you have made your own way in the world, then the courts can have huge sympathy for you, but simply say, you do not need anything from this estate. And so, you know, adult children have to think quite carefully about advancing 1975 Act claims, when they’re in a financially comfortable position, because especially if the estate isn’t huge, courts are not going to be willing to grant them very much from the estate at all.

What is a lifetime gift? Can it be challenged?

Maria Peyman 
That can be quite disappointing. I can see how people, as you say, having started this conversation at the top where we say there are no rules for us, in England, and no obligations. It does not, as you say, it does not alter expectation, rightly or wrongly. I have heard the term used as a lifetime gift, what is a lifetime gift? Is that something you can challenge? Or is that something you are stuck with? 

Anna Kelly 
Yeah, many people do not get lifetime gifts from their parents during the parents lifetime because they need those funds for their own day to day costs. However, sometimes people do want to make lifetime gifts to children for weddings, for house deposits, those sorts of things and that is normally absolutely fine but the same principles do apply to those gifts. As if you were sort of challenging the validity of a will you can challenge the validity of a gift. So was there any forgery in terms of the papers that were signed? Was there any undue influence? Did the individual have the required capacity to make those gifts, and quite a lot of the time, you know, family members are appointed as attorneys to act for the individual under a power of attorney.

You have to be very careful that you do not use that role to benefit yourself by essentially authorising gifts to yourself. The odd Christmas present and birthday present to family members, nobody is going to bat an eyelid. However, if suddenly 1000s of pounds are coming out of accounts then you need to look carefully to see whether the person at that time was being unduly influenced or had the capacity to do so. Because you are taking money out of the estate. So that potentially the person receiving the lifetime gifts is not going to receive anything under the will. But that does not really matter, because they’ve essentially got all of the money from the estate whilst that person was alive. So that can be something that people use that they think cannot be challenged but it absolutely can.

Equally, quite a lot of people do not like the idea of their hard earned savings being paid on care home fees, and can make lifetime gifts to reduce the cash available for care home fees. I think people think that they can get away with that, but they absolutely can’t and the local authority if they think that has happened, and look back at the gifts, and think is this a deliberate deprivation of assets to mean that the local authorities have to pay care home fees and they themselves can pursue claims in that respect. So you do have to be equally careful when making lifetime gifts as you are executing a will.

What kind of disputes can arise with trusts?

Maria Peyman  
Okay, so I can see how lifetime gifts might only come up depending on how things are administered. They may only come to the knowledge of other heirs or siblings after someone has passed away and everybody starts going through accounts and finding out what is going on. Your team is called the contentious trusts and probate. I think we have just focused on probates what kind of disputes can arise with trusts?

Anna Kelly  
I think that comes up in the media less because trust disputes are often very complicated. So for example, you can have claims that a trustee has acted in breach of their duties that they have negligently carried out their role as a trustee.

Often I think people are appointed trustees or agree to act as trustees and they really do not understand the quite onerous duties, they are under as a trustee and the importance of taking sensible professional advice, both legal and financial. So quite often, you find that trustees are in breach of their duties, but they have no idea that they were actually doing anything wrong. Then it is about trying to roll things back and working out how we rectify that position. Quite a lot of the time the actual trust document can be unclear or it can be so complicated that it does not actually carry out the wishes of the person who set up the trust in the first place. So it is, again, analysing the terms of the trust document, see if there’s any ambiguities, or if it does, what it needs to do. And then, it’s quite a complicated situation that keeps cropping up at the moment is that trusts are created as a sham to try and hide assets to move assets when you know that they should be allocated elsewhere.

So those kind of disputes do come up quite often. Again, we try to settle those types of disputes at an early stage. Because often trustees do not realise they have done anything wrong and as soon as it is pointed out to them, they are horrified and they want to do whatever they can to actually put it right. However, even if they do realise they were doing something wrong, if they are called out about it, they definitely do not want this to go before open court in which they can be quite heavily criticised. Those are the types of disputes in relation to trust disputes, as it were.

Is it usually beneficiaries who bring these claims?

Maria Peyman
Is it largely beneficiaries that bring those sorts of claims or find out about those claims? Or are there other bodies or people that might also be able to bring those or have a reason to have those claims?

Anna Kelly
Yeah, it is mainly beneficiaries. They either are not getting any information from the trustees and they are thinking, oh, gosh, is something untoward going on here or they have suspicions themselves, and they just want the position investigated to see that the trustees are acting appropriately. Quite often, there’s more than one trustee appointed, so two or three is pretty standard and you are worried that one trustee has gone off on his own accord and done something without the authority of the other trustees. So that happens quite a lot, because the co-trustees don’t want to be held responsible for the actions that the trustee that’s gone a bit rogue has gone and done, so it’s a combination really, of both trustee and beneficiary claims. 

Is there anything you would like to add about contentious trust and probate?

Maria Peyman 
I think we have probably covered a vast proportion of what you do, but is there any other any other aspects that you think I have not asked about? Or things that crop up that you think actually that people might want to know that?

Anna Kelly 
Yeah, I think, when I was talking about lifetime gifts, when you are appointed as an attorney to act for somebody, we do quite a lot of court of protection work. So when you are appointed as an attorney, or you are a third party that does not think that the attorney appointed is doing a very good job and that there could be a conflict of interest. We do quite a lot of contested court of protection applications, in terms of trying to safeguard the assets and wellbeing of the individual who is obviously still alive. That is quite a big area of work that we do as well but the contentious trusts, as we have talked about is probably our key areas.

Questions regarding the appointment of an attorney

Maria Peyman 
So on the court of protection, your attorneys are obviously appointed, but if there is a concern about why that attorney was appointed. So in a similar way, as you might have a concern about the manner in which a will was changed or set up, is that sort of a similar concept? If you were concerned about somebody who was suddenly appointed as your, I don’t know, your mother’s attorney and you thought there’s something untoward about it, that you could then actually take some steps as you say, because then you would be concerned about dissipation presumably of assets before somebody passes away during their lifetime?

Anna Kelly 
Yeah, absolutely. If somebody crops up and is appointed an attorney that’s completely unexpected, then you certainly want to ask some questions as to why that happened, to double check that the individual had capacity to appoint that person, as attorney. Attorneys have very onerous duties as well, because they are appointed to act on behalf of the individual. For example, you would be expecting them to keep accurate records of the financial situation of that individual, how those assets are managed and if you have any concerns. If you are asking these questions, and you are just not getting anything back from the attorney, then you can apply to the court of protection, and they can force disclosure of some of these issues. I think if you are getting to the stage where the court of protection is forcing that person to give you information, there is a high chance something is going on that needs to be rectified anyway. You would be looking at whether that attorney’s appropriate for them to continue or if somebody else needs to be appointed to act on the individual’s behalf.

Maria Peyman  
Thank you. That has all been very informative. Thank you very much. I think that people can find out lots more information on our website as well about you and your team and you are distributed around all our offices. I think that is right, isn’t it?

Anna Kelly  
Yes. We are, we are everywhere now.

Maria Peyman   
Just great. Well, thank you very much.

For further information regarding Contentious Trust and Probate, please contact Anna Kelly or a member of our Contentious Trust and Probate Team.