An ongoing court case regarding a will dispute involving four charities has meant that once again charities are facing the criticism of the media. Despite a recent success for charities in the Supreme Court (Ilott v Mitson), charity legacy disputes are on the rise and continue to receive abundant negative attention from the media.
In this particular case, the Deceased, Tracey Leaning, had made a will in 2007 leaving her estate of some £340,000 to four charities - The Dogs Trust, Friends of The Animals, World Animal Protection and Heart Research UK. However, Tracey Leaning later met her partner, Richard Guest, and in 2014 purportedly prepared a new, handwritten will leaving her estate to Mr Guest on the condition that he would take care of her three dogs.
The media reports state that the four charities are understood to be challenging the validity of the 2014 will. If that will is found to be invalid, the Deceased's estate will pass in accordance with the terms of the 2007 will, i.e. the £340,000 estate will pass equally to the four charities. Mr Guest has expressed his distress in no uncertain terms in the media reports.
So, when faced with a legacy dispute, what is the right approach, and what does the charity need to consider? Although charities cannot avoid legacy disputes altogether, there are steps they can take to make sure that any disputes that do arise are managed in the charity's best interests.
Charities rely heavily on testamentary bequests for their work and charity trustees would in fact be in breach of their duties if they did not take steps to maximise the legacies which they have been given. The Charity Commission has issued guidance for charity trustees on taking or defending legal action, click here to view, which covers disputes involving a charity's right to property under a will. This would therefore include challenges to the validity of the will containing the legacy, claims under the Inheritance (Provision for Family and Dependants) Act 1975, and claims based on proprietary estoppel (where a person claims that the testator promised property to them and that they then acted on that promise to their detriment).
Charity trustees must act in the best interests of the charity, and that can include taking action as well as defending action. Charity trustees should not simply concede a claim at the first sign of a dispute. The guidance is useful reading and sets out some "important principles" for trustees who are considering whether to take or defend legal action. Charity trustees must consider the guidance and will be expected to show that they have applied the principles of the guidance when their charity is involved in a legacy dispute.
In acting in the best interests of the charity, the charity trustees will need to take into account the costs and reputational risks the charity faces by taking or defending legal action. So what should charities do to resolve disputes as quickly as possible, while keeping costs down and reputational damage to a minimum?
The Charity Commission's guidance provides that trustees should:
- Take and consider legal advice
- Consider and assess the economic prospects of success or failure and the impact on the charity
- Consider whether their intended actions are proportionate in the circumstances
- Decide whether it is necessary or appropriate to ask for the commission’s consent or advice
- Unless time constraints for bringing or responding to an action prevent it, explore (and, if appropriate, rule out) all other reasonable options open to them to resolve the issue, such as alternative dispute resolution or agreeing a legal compromise
- Unless a charity has the necessary in-house expertise, take and consider whatever other specialist advice they might need to inform their decision.
Seeking early legal advice on the merits of the claim can potentially save a lot of time and money. By doing so, the charity's legal advisor can carry out the often potentially difficult balancing act in deciding how the charity should deal with the claim - weighing up the value of the legacy to the charity in comparison with the merits of the claim, the cost of litigation, and the resources of the other party to not only pursue the claim but also their ability to pay any award of costs, and the possible public relations (PR) implications.
The charity will also then be in a good position to be able to see off weak claims early on in correspondence at minimum cost, or to resolve more meritorious claims without the cost of going to court, perhaps by mediation or another form of Alternative Dispute Resolution.
Striking the right balance between defending the charity’s position and settling a dispute can be difficult, but taking early advice can greatly increase the chance of your charity achieving a favourable outcome, while making its approach more defensible and less susceptible to potentially damaging PR.
Where there are other defendant beneficiaries, their appetite to defend the claim should also be ascertained as early as possible. It may be that the other defendant beneficiaries are willing to compromise the claim without involving the charity's legacy. If more than one charity is involved, in order to save costs, we also recommend that the charities consider appointing one firm of solicitor to act for them jointly.
With regards to protecting the charity's reputation, the answer is to obtain both legal and PR advice, and be prepared to be proactive - where court proceedings have been issued, it is usually a good idea to prepare a statement or draft press release setting out the charity's position in anticipation.
The media clearly has an appetite for negative press coverage about the charity sector. Court action is public (whereas as a settlement agreement reached out of court can include a confidentiality clause) and so resolving matters before they reach court (if this is appropriate), is obviously desirable - not only to save on costs, but also to avoid negative PR implications.
Please contact our Disputed Wills and Trusts Team by telephone on freephone 0800 0931336, or by email at firstname.lastname@example.org for a free, non-obligatory chat to see how we can help you.