Charities play a crucial role in our society. Yet they have never been under so much pressure, facing both reduced income and increased public scrutiny all at a time when their services and support are more needed than ever.
We act for many charities, which come to us for help when they find themselves involved in a dispute. These often include claims relating to legacies (gifts left in wills), where charities find themselves on the receiving end of a claim by a family member disappointed not to have been left a gift themselves.
Charities are, understandably, very keen to respect and uphold a supporter’s wish to leave a gift to their charity, whilst also avoiding acrimony with the supporter’s family. Charities can also be nervous about how a matter might play out in the press if the matter became public.
Claims brought against charities under the Inheritance (Provision for Family and Dependants) Act 1975 can seem daunting, especially when an applicant is motivated by a desire to “prise back” what they see as family money to which they believe they are entitled over the charity. Whilst there are claims with merit (for example, a claim by a widow utterly dependant on her husband who has been left just half his estate on the assumption that the estate would be worth much more than it is), the vast majority of claims we deal with could reasonably be described as “try ons” or, to quote Deputy Master Lloyd in Shapton v Seviour [2020], “absolutely hopeless”
In Shapton, an adult child of the deceased brought a claim for the majority of the value of the estate. However, it was clear that she was not in financial need (a crucial element in a 1975 Act claim where the claim is not brought by a spouse), with the judge noting her holidays abroad and money spent eating out at restaurants. Also, were her claim to succeed, the surviving spouse would not be left with sufficient provision to meet her own living expenses including those relating to an ongoing health condition.
The claim failed in its entirety and the judge was very critical of the claim having been brought at all. Relevant case law shows that even those claims with merit usually generate only modest awards from the court and that the 1975 Act should not be seen as an opportunity to improve one’s standard of living simply because there is a pot of money “up for grabs”. In fact, judges are usually quite conservative in their awards.
Unfortunately, this reality does not stop people from bringing weak claims. Nor does it stop some solicitors from encouraging people to bring claims – however unmeritorious – to generate fees.
Whilst we always advise charities on the benefits of settlement in appropriate cases (including avoiding taking up management time), we also encourage charities to be bold in their defence of claims which clearly lack any merit. For example, we were recently asked to advise a household name charity at the pre-action stage of its defence of a 1975 Act claim. The claim was hopeless. It had been brought by three grown up children of a man who had supported the charity during his lifetime and who wished to continue to do so in death. A quick review of bank statements, draft witness statements and other miscellaneous documents showed that all three children had a reasonable income, somewhere to live and, in one case, some savings. In short, none of them had any ostensible financial need. One of the adult children claimed to be heavily in debt and therefore in need, but a review of her credit card statements showed that much of her debt was lifestyle-based as opposed to essential. On our advice the charity took a strong line, rejecting the claim in correspondence and refusing to consider settlement on the basis that the claim was entirely without merit. We never heard from the adult children or their solicitors again.
Both this case and Shapton are good reminders that not all claims have merit nor that all claims are worthy of settlement. Charities are entitled to gifts voluntarily left to them by will (the Supreme Court in Ilott v Blue Cross and others was clear that charities do not have to justify their position as chosen beneficiaries), and charities should not feel under pressure to settle a claim. Charities should carry out a full assessment of the merits of the proposed claim and seek legal advice. If a claim does have merit then of course charities should consider settlement. But where a proposed claim is without merit and unlikely to succeed, charities need not fear rejecting such claims and asserting their right to collect in the gift that the testator generously chose to leave to further the charity’s important work.
If you or anyone within your charity would like to discuss any of the issues raised in this insight please get in touch.