In a recent High Court case, the RSPCA lost its claim over a legacy in a controversial decision concerning a dispute over a loosely-worded will. Even though the judge criticised the charity for bringing the claim, and ordered indemnity costs to the family involved, the RSPCA is appealing against the decision. The appeal will be heard next month.
The deceased had left his property, valued at £169,000, to his lifelong friends. He also left a legacy to his brother and his friends. His will stated that any Inheritance Tax (IHT) due on the property should be paid out of the residue of his estate and also that the pecuniary legacies were to be gifts, valued at the maximum amount that would not incur IHT. The RSPCA was to receive whatever was left of the estate after these distributions had been made.
The issue arose because the man’s will stated that any IHT due was to be paid out of the residue. The RSPCA claimed that the clear intention of the will was that the estate should not pay IHT and the house was included as part of the IHT ‘nil rate band’. Had its argument been successful, this would have significantly reduced the amount received by the deceased’s brother and friends.
The judge concluded that the meaning of the will was that the amount that should pass under the pecuniary legacy was the amount equal to the nil-rate band in force at the date of death, namely, £300,000. He held that IHT was payable on the value of the house grossed up. The decision meant that the RSPCA was left with substantially less than it would have received had its interpretation of the terms of the will been accepted.
This dispute could have been avoided had the terms of the will been more precise. Charities often vigorously pursue their interests if their interpretation of a will indicates that they may benefit from so doing. If you wish to make a charity a beneficiary under your will, contact us for advice.