Legacies Roundup | July 2019

In our July 2019 edition of the Legacies Roundup we update on the current state of play for the replacement of the Smee & Ford service, look at the Court’s view of applications made outside of the six month time limit under the Inheritance (Provisions for Family and Dependants) Act 1975, and give a review of the new practice note recently published by Practical Law on ‘Wills: drafting gifts to charity.’

We also take the opportunity to share some of the thoughts that came out of our recent Legacies event, held on Monday 24 June, ‘When to look a gift horse in the mouth: legacies and ethical and reputational risks revisited’, which looked at when charities might turn down or return a legacy.

Smee & Ford – interim arrangement announced

As many of our readers will be aware, back in January 2019 HMCTS announced that it would be ending its current contract with Smee & Ford, on 31July 2019. Updates on this issue from HMCTS since then have been few and far between and, understandably, this has been met with great concern across the sector with industry experts wondering how HMCTS will replace the current system effectively in the very short timeframe available.

After much anticipation, Susan Acland-Hood, the Chief Executive of HMCTS, published an open letter to charities on Thursday 4 July announcing that, following ongoing consultation with the HMCTS steering group, it has decided that the current arrangement with Smee & Ford will continue on an interim basis until a long term replacement can be established.

HMCTS anticipate that this interim arrangement will continue for at least the next 12 months, while discussions continue as to how to design an appropriate long-term replacement system.

Other changes are also on the way: Ms Acland-Hood noted that the upcoming changes to probate copy fees (in force from 22 July) will mean an increase in operating costs for Smee & Ford, which in turn will require subscribers to Smee & Ford to pay an increased fee for each notification they receive – though they will now receive a copy of the relevant will with each notification too.  Smee & Ford should be contacting customers directly about the implementation of these changes.

A copy of Susan Acland-Hood’s letter can be found here.

Although this latest update is perhaps welcome even if only to inform charities that they are likely to have another 12 months or so to rely on Smee & Ford’s notifications, we understand that the lack of clarity on the long-term replacement system is of concern and that this is a worrying time for legacy professionals. We will be keep you updated on any developments.

1975 Act claims made outside of the statutory time limit – the Court’s view

Under the Inheritance (Provision for Family and Dependants) Act 1975 claims must be brought no later than six months from the date a grant of representation is issued, unless the Court agrees to accept an application made out of time. The power to allow these applications outside of the statutory time frame rests solely with the Court and two recent cases have shown how seriously the Court takes this responsibility and any attempts to infringe on their purview.

In the recent case of Bhusate v Patel, the claimant made her claim against her late husband’s estate an extraordinary 25 years and nine months after the expiration of the six month deadline. On an instinctive basis many would say, as the defendants argued, that it was far too late for the claimant to make an application. However, perhaps surprisingly, the Court allowed the application, illustrating an important lesson that charities will want to take note of. Many would dismiss an application made so late out of hand. However, the power to allow such applications remains in the hands of the Court and charities should stay vigilant as to the possibility of the Court allowing an application long after the six-month window has elapsed. In this case, the Court allowed the claimant to make her application so significantly out of time because, among other things, she was able to explain that the delay was partly down to the actions of the defendants. The Court also recognised that that if permission was not granted it would leave her homeless and without any other remedy.

This principle that discretion over time limits is a matter for the Court – and not interested parties – to determine was again highlighted in the recent case of Cowan v Foreman. Here, the deceased died on 9 April 2016 and a grant of representation was obtained on 16 December 2016, meaning the six-month time limit expired on 16 June 2017. The parties entered into a standstill agreement on 25 January 2018, with the defendant’s solicitors stating their clients would ‘not take a point on the six month deadline having passed pending receipt of a letter of claim.’ However, Mr Justice Mostyn took a very dim view of this approach, finding that ‘it is not for the parties to give away time that belongs to the Court’ and the application was refused.

Although the use of standstill agreements is common, and in the right context they may be entirely appropriate, we would not recommend that parties use them to try to “stop” the six-month clock from running in 1975 Act claims: such applications are between the Court and the applicant, and seeking to oust the Court’s involvement risks incurring the wrath of the judiciary and significant disadvantage as a consequence. A better approach would be for a party to protect its position by issuing proceedings ‘in time’ and then agreeing (with the Court’s permission) a temporary ‘stay’ or suspension of proceedings to enable settlement or other discussions to take place.

If you would like to read more about these two cases and the Court’s justification for their decision, Leticia Jennings and Victoria Bos have compiled an article examining the approach in each of these cases which was published in our Summer 2019 Charity and Social Enterprise Update. 

The full article can be found here.

Practical Law’s new practice note: ‘Wills: drafting gifts to charity’

Some of you may be aware that Thompson Reuters Practical Law has recently released a new practice note on drafting gifts to charities in Wills. Thompson Reuters Practical Law is a popular and well regarded legal database and it is likely that many solicitors drafting Wills for your legators will use this resource.

The guidance covers a range of useful topics including: identifying the charity, IHT, gifts for specific purposes, receipts and substitution if a charity no longer exists and points to their more in-depth resources for clarification of the most complex subjects, such as the knotty Re Benham and Re Ratcliffe issues in relation to bearing IHT.

Readers will also be pleased to hear that the note recommends professionals engage with charities, and to encourage their clients to do the same which we thoroughly support. This is particularly useful in making sure the charity is correctly identified in the Will and where donors want to consider leaving a restricted legacy.

Bates Wells’ latest Legacies outing

Thank you to everyone who attended our recent Legacies event on 24 June and helped to make the event such a wonderful success. ‘When to look a gift horse in the mouth: legacies and ethical and reputational risks revisited’ built on our headline session at the ILM conference in 2018 and looked at when charities might consider when choosing to reject or return a legacy for ethical and reputational reasons and when to involve the Charity Commission.

With charities facing ever increasing scrutiny of the gifts they receive, following the Presidents Club scandal and the Sackler Trust attention in the media, the session touched on a number of tricky but important issues. We were delighted to be joined by Rebecca Massey and Sianne Haldane from Cancer Research UK, and James Stebbings from MacMillan Cancer Support, who were able to provide us with some background on how their charities balance the considerations which apply to potentially controversial gifts.

We were also delighted to be joined by Kirsty Weakley of Civil Society who was able to give us a journalist’s perspective and some practical tips on how to ensure charities are prepared for any media attention which may arise.

Some of the key issues discussed at the event were:

  • when to carry out due diligence on donors when receiving legacies;
  • what a good gift acceptance policy should include;
  • key considerations when deciding whether to accept or reject a legacy;
  • how to refuse, reject or return a legacy;
  • documenting the decision making process;
  • the importance of protecting reputation and making sure charities are prepared with a positive PR response;

We had some wonderful feedback which we are very grateful for, with attendees describing the event as:

“Very informative, it was a good follow on from ILM 2018”

“Very good – a lot of food for through particularly around policies which we may need to put in place”

“Great to hear how other charities handle these issues and check our policies are sufficiently robust”

We hope that everyone who attended enjoyed the event. If you were unable to attend and would like a copy of the slides, please email Victoria.

Please do keep your eyes peeled for our next events and updates.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of July 9, 2019.