Rob Oakley advises how charities can deal with a challenge to a legacy

The number of disputed probate cases heard by the courts has tripled in recent years – and that is just the tip of the iceberg. There is now a much higher risk of a will under which a charity has been left a legacy being challenged by a disgruntled family member or some other person.

This trend may in part be down to a perception that some charities should be grateful to receive anything, that they are sensitive to the possibility of negative PR, a soft touch and likely to settle on terms favourable to the person challenging the will. With all the other pressures on their time it can be tempting for charity trustees to consider a quick and easy settlement.

So, when faced with a challenge to a legacy you have been left under a will, what is the right approach and what does your charity need to consider?

The starting point is that the trustees of a charity have a duty to act at all times in the best interests of the charity and must protect and maximise the assets of the charity, including any legacies that are due to them. This means taking appropriate steps to protect legacy income and can mean fighting claims, sometimes all the way to a trial at court, if need be. Yet at the same time the trustees need to consider when it is time to cut their losses and move on.

The first step is for the charity to seek legal advice. They will often need to undertake a potentially difficult balancing act in deciding how to deal with any claim, taking into account all relevant factors including;

  • the value of the legacy to the charity;
  • the possible PR implications;
  • the likely costs of litigation and the time it would take for the case to be resolved at trial;
  • the resources that the charity and the other side have available to fight the claim, including their ability to pay an award of costs, if their claim is unsuccessful;
  • what issues of fact and law the dispute is likely to involve;
  • the position adopted by any other charities which are a party to the litigation; and
  • alternative dispute resolution and settlement options.

Where a number of charities are beneficiaries under a contested will, ideally they should seek to take joint legal advice, to save costs. However, it is not unknown for different charities to disagree over the best approach. Where one charity wishes to settle but there is no consensus, as has been the case in disputes we have dealt with, they cannot force the other charities to settle. They can, however, afford themselves a degree of protection by making their own offer to settle. The judge could ultimately penalise the charity or charities refusing to consider settlement when it comes to awarding costs.

If the person contesting the will has a reasonable claim, the next step should usually be to consider settlement discussions. The charity ought to explore settlement possibilities early on and avoid the publicity associated with a trial at court.

A charity will have the power to settle a dispute provided it acts ‘reasonably’. In most cases decisions can be made in the context of the legal advice received, but if the trustees want further comfort it may be possible to seek advice from the Charity Commission on the trustees’ powers and duties.

Where court proceedings are contemplated and the trustees wish to obtain approval of the steps they are proposing to take, the charity can consider seeking Charity Commission advice or consent, to bring or defend legal proceedings, or an order from the court authorising a particular course of action, the latter being known as a ‘Beddoe’ order.

If an ex gratia payment is being considered, Charity Commission consent will be needed.

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.

BWB’s Charity Legacies & Probate Disputes team advises on all legacy related issues; from disputes that may arise from advising on legacy fundraising and day-to-day probate queries, to helping you deal with difficult legacies (including those involving restricted gifts, gifts of property and shares), challenges to the validity of wills, problems with executors and their fees, and claims under the Inheritance (Provision for Family and Dependants) Act, 1975, our team is able to provide a full legacy-related advice service.

Further information is available at Legacies and Probate Disputes.

We are pleased to offer a free half an hour consultation to new clients. To make an enquiry on a no-obligation basis or for more information on our services, please email us at or call 020 7551 7777 and ask to speak to Rob Oakley.

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Robert Oakley

Partner and Head of Dispute Resolution

+44(0)20 7551 7792 / 07891 143718

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Posted on 27/04/2015 in Legal Updates

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