Charity takes donor’s family to court over deceased supporter’s estate
A charity, the Woodland Trust, has lost its claim for half the estate of a deceased supporter, in the Court of Appeal.
The late Valerie Smith left her family such assets or cash “of an aggregate value equal to such sum as is at the date of my death the amount of my unused nil rate band for inheritance tax”. The remainder was intended to go to the Woodland Trust.
The will was executed in 2001, and Smith died in 2011 with an estate valued at £680,805. In the meantime, however, the Finance Act 2008, s 8a allowed the transfer of unused nil-rate band between spouses and partners. The executors made use of s 8a, which increased Smith’s nil-rate band to £650,000, leaving a £30,805 legacy to the Woodland Trust.
However, the charity contested this interpretation, arguing that the s 8a transfer did not take place until after Smith’s death, therefore “at the date of…death” Smith’s nil-rate band was only £325,000.
Giving a supporting judgment in favour of the deceased’s family, in Woodland Trust v Loring [2014] EWCA Civ 1314, Lord Justice Lewison said: “We have to look to the ‘the purposes and values which are expressed or implicit in [the] wording’ of the will in order to find the answer. In my judgment the implicit purpose of the will was to give as much as possible to Mrs Smith’s family without incurring inheritance tax and to give the rest to charity.”
Tony Millson, head of Royds Solicitors’ private client department, says: “I think this is the right result.
“It was perfectly valid wording pre-2008, before the transferable nil rate band came in. This highlights the importance of drafting wills extremely carefully, and of keeping them under review. There is no ongoing duty to continually monitor wills, but solicitors could go the extra mile and review them periodically.”
Paul Hewitt, partner at Withers, says: “Charities, along with surviving civil partners or spouses of second marriages (for instance), faced with similar clauses are unlikely to take comfort because the Court of Appeal took a broader, more purposive, approach than the judge at first instance.
“However, not all nil rate band clauses are in this form and there will be many instances where the wording only passes a single nil rate band. Individual clauses will still need to be considered on their specific wording.”
However, will draftsmen could take comfort from the decision, he said, “because it will reduce the number of cases where disputes arise (and with it the risk of an allegation that those with an ongoing relationship with testators ought to have to advised their clients to revise their will)”.
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