Legacies are an important part of the business of any charity. For this reason, charities should be aware that inheritance disputes are becoming more common. The cases that we see in court are just the tip of the iceberg as many are settled out of court.
The recent English case of Gill v RSPCA highlights the issues that charities might face in this area. While the case is not Irish, the decision might be persuasive in an Irish court.
The case centres on the estate of Mrs. Gill which was worth over £2m and was left to the RSPCA. Nothing was left to Mrs. Gill’s daughter, Dr. Gill. The daughter brought a case arguing that she should inherit her mother’s assets (primarily a farm of 287 acres) and won after a long court case that went all the way to the Court of Appeal in the UK. Dr .Gill received the entirety of her mother’s estate while the RSPCA were left with a large legal bill and a somewhat tarnished reputation.
Dr. Gill argued that she should have received the assets on three grounds:
- Mrs. Gill did not have full knowledge and approval of the contents of the will.
- Mrs. Gill did not leave the legacy to the RSPCA of her own free volition. The legal term for this is “undue influence”. Mrs. Gill was a very nervous woman who was afraid to leave the house and talk to people. Mr. Gill was a very strong character. It was argued that Mrs. Gill was forced to leave everything to the RSPCA and that she would have preferred to leave everything to her daughter.
- Promises were made to Dr. Gill that she would inherit the farm and she helped out on the farm on this basis. It would be unfair for the estate to go to the RSPCA. This is a legal concept called “proprietary estoppel”.
The RSPCA have been criticised (even in the judgement itself) for pursuing the case all the way to the Court of Appeal. They were ordered to pay some of the High Court legal costs of Dr. Gill on the basis that they pursued the case needlessly and that they should have engaged more readily in alternative forms of dispute resolution (for example mediation).
However, it is not the place of the charity trustees to simply abandon a case like this for fear of the negative consequences of pursuing the case. Trustees have a duty to act in the interest of the charity, and that means that they cannot simply walk away from a legacy such as the one in this RSPCA case. Indeed, this case creates a difficult position for the legacy officers of charities as they must balance their obligation to maximise the assets of the charity against the risk they will lose their case and incur substantial legal costs.
Mediation is certainly an option for a charity in this position. This is a process where the parties meet with a professional mediator and try to agree a resolution to their dispute. It is clear from Gill v RSPCA that the courts prefer and expect parties to attempt mediation before resorting to a full court hearing. A significant benefit of mediation for charities is that the process is confidential in comparison with a public court case. Charities should always strive to avoid negative publicity and mediation can help them in this regard.
The overall conclusion is that while every case will be different, charities need to approach legacy disputes with diplomacy, tact and an openness to methods of alternative dispute resolution.
Of course there are measures a charity can take to prevent such a situation occurring in the first place. Unfortunately for charities, often they won’t know about the legacy until the testator (the person who made the will) has died. In that case, the family members taking the claim will know much more about the circumstances of the will than you. However, where you are aware of a substantial legacy in advance of the testator’s death, there are some helpful steps you could take.
- You could record that person’s interest in your charity and the reasons why they would want to leave something to you. In the Gill v RSPCA case, a complicating factor was that Mrs. Gill had no affiliation whatsoever with the RSPCA. Where someone has told you that they intend benefitting the charity in a substantial way, you could sit down and have a chat with them and record their reasons for donating. You might encourage them to leave a letter with their will explaining their motivations for the legacy (particularly where they are preferring your charity over family members). You could also document that person’s affiliation with your charity, using things like membership and donations records.
- You might encourage the testator to seek good legal advice when drawing up his/her will. This would help avoid successful challenges like Dr. Gill’s. For example, in this case it appeared that Mr. Gill was the one who desired the legacy to be left to the RSPCA. With legal advice, an arrangement could have been put in place to benefit both the family and the charity. In Patrick J Farrell, one of our key practice areas is inheritance disputes and we have significant experience in drawing up complex estate plans to ensure that a person’s wishes are carried out.
- The charity might encourage the testator to discuss their wishes with their family before they die. That way there will be no nasty surprises and this might reduce the motivation for litigation.
Of course, the last thing you want to appear as is intrusive. You will want to approach these issues diplomatically with people who are to donate. Perhaps an information leaflet on the best way of leaving a legacy would be a good idea and we can help you with that.