Why disputed wills can put assets in a deep freeze
(Source: Citywire written by Alan Dickins - http://www.citywire.co.uk/new-model-adviser/why-disputed-wills-can-put-assets-in-a-deep-freeze/a436667/3?ref=new-model-adviser-features-list)
A dispute over a will can cause long delays and may even threaten the value of assets in the estate. Here are some of the scenarios that can give rise to contested wills, writes Alan Dickins of Thomson Snell & Passmore.
It is one of the more unfortunate facts of life that it all inevitably ends in death. The legal personal representatives (executors if appointed by will, administrators if not) then step into the shoes of the deceased. They are responsible for sorting out his affairs by collecting in all the assets, paying the debts and eventually distributing the balance between those entitled.
The need for a grant of probate – the court order that confirms the executors’ authority – always results in a period of suspension after the death. Before dealing with any assets in their hands, fundholders require it as proof of the transfer of title to those assets from the deceased to his or her personal representatives, yet it cannot be obtained until the whole of the estate has been valued.
The fundholders then become liable to account for those assets simply in accordance with whatever instructions they are given by the persons named in the grant. It is none of their business to enquire into the administration of the estate to ensure, for example, that the funds in their hands are passed on to the ultimate beneficiaries: that is the executors’ responsibility.
In most cases, the transition is achieved reasonably smoothly, but the interval between death and probate can be greatly prolonged if there is a dispute over the right to probate itself. Such disputes can arise in any number of different ways.
Witness flaws
The law does not recognise as valid, for example, a will that does not comply with the statutory requirement for signature in the presence of two witnesses present at the same time. The validity of a will can be disputed if it can be shown by evidence from the witnesses that they were not present together when it was signed. The testator might be found to have signed it alone and then collected the signatures of his ‘witnesses’ afterwards (quite possibly on separate occasions), which would be fatal to its validity.
At the risk of stating the obvious, a will that has been revoked by the testator (typically, but not necessarily, by a later one) will similarly be invalid. Particular problems can arise, though, if a known will cannot be found after the death. Was it destroyed and, if so, was it destroyed by accident (in which case an application may be made for probate of a copy) or by design (that is, with the intention of revoking it, in which case probate will be refused)?
State of mind
The state of mind of the deceased at the time the will was made is also important: he must have been able to understand what he was doing (frequently the subject of argument in the case of the very elderly and/or the very ill), and he must have made the will free from any undue pressure or coercion by others.
The last requirement was the central issue in the legal battle between Dr Christine Gill and the RSPCA, which went to trial last year.
Her parents had together made identical wills, leaving their respective estates to each other and to the RSPCA in default. Her father died first and her mother died some years later without ever having altered her will.
Christine herself, their only child, had been excluded on the ground that she had already been provided for and so she stood to lose the family farm in Yorkshire that she might otherwise have expected to inherit. She claimed that her mother had disliked the RSPCA and had been coerced by her father into making the will in those terms. The trial judge agreed with her and set aside the will, but the RSPCA has filed an appeal, which is listed to be heard in November, so the battle goes on.
It was argued in the Gill case that if the mother had really disapproved of the will she had made, she could have altered it after her husband had died. And so she might have done.
But that would not have been an option if the two wills had not merely mirrored each other, but had additionally been the subject of an agreement between Mr and Mrs Gill that neither will could be revoked without the other’s consent.
Such an agreement, which is rare – but not unknown – means that after the first death the survivor’s will is virtually irrevocable and any subsequent changes have effect only subject to the terms of the original ‘mutual’ will.
A further case in point
That was the issue concerning the wills of Mabel Cook and Ethel Wilson in another case that was tried recently. The two sisters lived together and each made a will in favour of the other and in default leaving everything to various relatives, friends and godchildren (the same beneficiaries in each). Mabel died first and Ethel later changed her will on two occasions, eventually leaving a legacy to her carer and everything else to a neighbour.
Following her death, both later wills were challenged by the default beneficiaries under the original will, and when the case came to trial the judge found on the evidence that there had actually been an agreement between the sisters that neither could revoke her original will without the consent of the other and that the wills they had made together were therefore mutual.
The last will was in fact admitted to probate, but the neighbour was ordered to hold the estate on trust for the beneficiaries under the original will, thus depriving her of all personal benefit.
Mrs Gill and Mrs Wilson both died in 2006, so their respective estates have remained unadministered for four years pending a decision in each case as to the validity of the last will and therefore as to whether it could be admitted to probate at all.
Depreciating assets
Long delays in obtaining probate can sometimes pose a threat to the value of assets in the estate. Wealth managers should be aware, though, that if there is a serious risk of depreciation the courts have the power to authorise (by the issue of a limited grant) the collection and preservation of assets (but not their distribution) pending the issue of a full grant.
The procedure can be used to enable share sales, for example, and can be useful not only where the delay is caused by a dispute over the validity of a will, but also in cases in which the executors are themselves the cause of the delay, either because there is disagreement or animosity between them or because they are simply dragging their feet and failing to act with reasonable expedition.
It should also be said that the grant of probate is not necessarily the end of the story either, because disputes can equally well arise during the course of the subsequent administration of an estate.
A disagreement over interpretation, for example, might not surface until afterwards, and indeed the statutory time limit for Inheritance Act claims does not even begin to run until after probate has been obtained. Furthermore, in cases of fraud (or even where, for example, the original application has been made in good faith but a later will is then found) the grant itself may be revoked by the court.
Such cases are fortunately exceptional, and in most instances the executors will, in any event, aim quite properly to continue the process of collecting in the assets even if their distribution has to be delayed until the dispute has been resolved. If they themselves have fallen out, though, or are simply inactive then it may be that fundholders could find themselves without full and proper instructions, possibly until application has been made to the court.
Trust disputes
By contrast, trust disputes lend themselves rather more easily to resolution without court intervention, because trustees can resign their office and may be persuaded to do so as a means of resolving disagreement, whereas executors cannot resign and can be removed only by a court order.
Nevertheless, wealth managers looking after trust funds may from time to time be faced with similar difficulties over obtaining any instructions they require. Unless all the trustees have died, though, there will not normally be a period of suspension akin to that between the death of an individual and probate of his will. The clients will usually be readily identifiable as the current trustees, but if they are in dispute, it becomes very important not to act without the agreement of all.
Alan Dickins is partner, private client department at law firm Thomson Snell & Passmore
