Charities and gift horses?

Wednesday, 13 April 2011 00:00

Should charities look a gift horse in the mouth? It goes against their instincts, but perhaps in future they should be a bit cautious when they are told of a legacy.

The RSPCA has not had much luck recently when it comes to legacy disputes. For the third time in recent months it has been in the spotlight following court decisions which seem to have gone against it – although in one case a judge's scathing opinion of the charity for pursuing a case was overturned on appeal.

The most recent also involved two other charities, The Blue Cross and the RSPB. Together they were the main beneficiaries of the estate of Melita Jackson, worth about £486,000. It has become a protracted saga involving her estranged daughter, Heather Ilott.

Mrs Ilott (50) is a married mother of five, living on benefits, and was not supported by Mrs Jackson. She brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975, alleging that her mother had not made "reasonable financial provision" for her in her Will. Mrs Jackson had left out her only child altogether, giving her reasons for doing so in a separate letter. The court initially allowed Mrs Ilott's claim and awarded her £50,000.

Mrs Ilott was not satisfied and appealed for more, while the charities had taken a pragmatic approach and accepted the court's decision. But now they felt, understandably, that they must protect what remained of their bequests. So they argued that Mrs Ilott should have had nothing. Their cross-appeal was upheld.

In the latest and probably final chapter, Mrs Ilott's further appeal has been allowed. The amount she is to be awarded will be decided later. She may get more, but she runs the risk that the court decides that the first judge was too generous to her.

This decision might disappoint charities, as it seems to suggest that, no matter what the mother said, her estranged daughter should be provided for. Why should she make a Will if it is going to be challenged? But this case by no means opens the floodgates. These claims turn on their own facts. In this case, the daughter's lifestyle, and suggestions that the mother chose the three charities out of spite, were unhelpful to the charities. But they are entitled to feel aggrieved that someone who had not had any contact with or maintenance from her mother since childhood, and could claim no moral obligation towards her, should successfully challenge the Will merely because she was living on benefits. One wonders whether the outcome might have been different if the beneficiaries had been family rather than distant charities.

Charities are faced with a difficult choice. They have to fight for what is due to them, and the RSPCA is rightly keen to uphold the wishes of anyone leaving it money, for fear of discouraging other donors. But the legal costs of a long battle can exceed the value of the legacy itself. Can they justify using precious funds in this way? The court itself made pointed remarks about settling the case as the parties should "consider whether a further hearing is in anyone's interests".

Richard King, Head of charities at Tozers LLP solicitors, comments: "So charities need to give serious thought to the reputational and financial risk of pursuing claims of this kind. But this case exposes a problem, especially for larger charities that will rarely know their donors: they ought to look very carefully at the background to any significant legacies, as there could be a challenge from an aggrieved relative or dependant."