An appeal over a loosely-worded will was decided this week by the Court of Appeal after the RSPCA decided to contest a controversial High Court judgment made earlier this year.
The RSPCA lost the original case and was heavily criticised by the judge and ordered to pay ‘indemnity costs’ to the family. Undeterred, the RSPCA lodged a notice to appeal to the Court of Appeal.
The dispute arose over the Inheritance Tax (IHT) arrangements of an estate. The deceased’s will bequeathed a legacy of ‘the maximum…without IHT becoming payable’ to be shared between his brother and two lifelong friends. He also left his house to the friends. He nominated the charity as the ‘residuary beneficiary’ of his estate, so the RSPCA stands to receive the value of the estate after the bequests to the man’s brother and friends. The problem arose because the man’s will stipulated that all IHT was to be paid ‘out of the residue’ of the estate.
The dispute, in essence, was over whether the will meant that the bequests should add up to the total IHT free amount plus the house, in which case the RSPCA would be left with a legacy of £483,000 with IHT to pay of £113,000, or whether, as the RSPCA contended, it meant that the man’s estate should not pay IHT, so the gift of the house was part of the IHT nil rate band.
The charity claimed that its interpretation reflected the ‘clear intentions’ in the man’s will. The Court agreed, holding that its interpretation was logically consistent with the wording of the will, whereas the alternative construction of the wording proposed by the deceased’s friends did not entirely make sense.
This case was avoidable and only arose because the will was not precisely worded. Charities often vigorously pursue their interests if their interpretation of a will indicates they may benefit from so doing. If you wish to make a charity a beneficiary under your will, contact us for advice.