Court supports charity in relation to Will construction


10th December 2021

Earlier this year a case caused the Courts to consider the construction of a Will when interpreting nil-rate band provisions.

Background

In this High Court case of Royal Society for the Blind v Beasant and Davies [2021] the deceased died in 2017 leaving an estate before tax of over £3 million to be distributed in accordance with her Will.

The deceased left a property free of mortgage or charge worth £240,000, shares worth ~£218,000 and personal items to her friend, John, the first defendant and a personal representative of the estate. Various legacies totalling £45,000 were left to individuals free of tax and the residuary estate was gifted to 21 named charity beneficiaries. The claimant, one of those charities, represented all the residuary beneficiaries.

As well as the other gifts above, Clause 4 of her Will provided a legacy to the first defendant as follows:

 

4. I GIVE the Nil-Rate Sum to my Trustees on trust for my said friend JOHN WAYLAND BEASANT.

4.1 In this clause 'the Nil-Rate Sum' means the largest sum of cash which could be given on the trusts of this clause without any inheritance tax becoming due in respect of the transfer of the value of my estate which I am deemed to make immediately before my death.

The second defendant was the other personal representative and a solicitor whose firm had drafted the Will.

The nil-rate band at the date of the deceased’s death was £325,000.

The dispute

The construction issue on which the Court had to decide was what the express intentions of the testator were in relation to clause 4.

The claimant contended that it meant that the sum due under clause 4 was the sum left, if any, after all the other legacies were discharged and as these exceeded the nil-rate limit it meant there was no sum payable to the first defendant.

The first defendant contended that clause 4 should be construed so that it gave him a tax-free gift of £325,000 (i.e. the nil-rate band sum) without reference to the other gifts in the Will. He considered 4.1 was unnecessary.

The second defendant did not attend and was not represented.

The decision

The High Court agreed with the charities that the first defendant was entitled to nothing under clause 4.  Master Shuman found that “If the deceased intended to gift the nil rate band to the first defendant the will could simply have said that” and continued “It would do considerable violence to the language of the will to effectively read clause 4 as meaning a sum which equates to the nil rate band at the date of death of the deceased and to ignore sub-clause 4.1 in its entirety”. 

The Court considered that clause 4 contemplated that the nil-rate band was calculated considering the inheritance tax of the estate as a whole and the charities were therefore successful.

Conclusion

Whilst this case was similar to another from 2010, the Master recognised each will is different. Care is therefore required when drafting a Will and each testator should ensure they understand the effects of clauses in their Will. Where such disputes arise and the Will was professionally drafted the notes made when instructions were taken may assist in determining the testator’s intentions.

If you need assistance with any Will disputes please contact Olivia Shenton-Taylor or Stephanie Walls.

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