A round-up of legal updates for the Wills and probate industry over the past month is as follows.
Contentious estates – a promise made by deed can override testamentary freedom
In Colicci v Grinberg, 2023 EWHC 1177 Ch, the High Court ruled that a deed executed in 2016 by a divorced couple (Ernesto and Josephine Colicci), in which they promised to make Wills leaving their ice-cream van business to their two children, was a mutual promise that was legally binding and created testamentary obligations. Consequently, the deed removed the couple’s freedom to dispose of the shares on death. Both parties had married again and Ernesto had made a new Will leaving his shares to his new wife. When Ernesto died unexpectedly, Josephine and the two children contested the terms of this new Will and sought to enforce the 2016 deed. Ernesto’s widow argued that a 2017 shareholders’ agreement had invalidated the 2016 deed, but the Court disagreed, concluding that: “the 2016 Deed imposes obligations on Ernesto and Josephine as testators, and confers benefits upon the adult children as beneficiaries“. Accordingly, Ernesto’s share of the business is inherited by the two children and not by his widow, a result that effectively means that a promise made by deed can, in some circumstances, override the general legal principle of testamentary freedom in England and Wales. Colicci & Ors v Grinberg & Anor  EWHC 1177 (Ch) (18 May 2023) (bailii.org); Deed made by couple after divorce removed their testamentary freedom | STEP
Contentious estates – testamentary capacity and remotely witnessed Will during the Covid pandemic
Baker v Hewston, 2023 EWHC 1145 Ch is a case concerning testamentary capacity and is interesting not only for the court’s comments on the interaction of the common law test of testamentary capacity with the statutory test in the Mental Capacity Act 2005 (“MCA“), but also for the court’s comments on remote execution as the Will was signed during the Covid-19 lockdown with the 91 year-old testator signing the Will sitting in a car with the witnesses watching him through the car window.
In respect of the test of capacity, the judge (HHJ Tindal – a judge who sits in both the Court of Protection and the Chancery Division) confirmed that the common law rule in Banks v Goodfellow applied in a probate context when assessing testamentary capacity but the judge analysed the MCA test and looked for areas where the two tests might be synthesised. The court commented that a “straightforward way” of reconciling the two tests was “for the first three limbs of the Banks test to be treated as the ‘relevant information’ under s.3 MCA and for the fourth limb to map onto s.2 MCA.” The first three limbs of Banks v Goodfellow relate to whether the testator has an understanding of the nature and effect of the Will, the extent of his/ her property and the claims upon him/ her. The fourth limb relates to whether there is a mental disorder or delusion affecting decision-making. The court commented “cautiously” that ss.2-3 MCA could be used as a “cross-check” to the Banks v Goodfellow test. In this case, this “cross-check” produced the same result: a finding of testamentary capacity. It will be interesting to see how this synthesis of the common law and statutory tests is applied in future and, ultimately, the Law Commission may have to revisit this issue as part of its supplementary consultation paper on the law of Wills (due to be published in September 2023).
In respect of the remote witnessing element to the case, the court concluded that the Wil had been validly executed and the remote witnessing was “an ingenious arrangement which predated the amendment to the Wills Act permitting ‘remote attestation’“. The court was satisfied as to knowledge and approval as the solicitor, whilst not having read the Will over to the testator, had sent it to him with a clear client care letter and the testator had signed the acknowledgement slip. It is useful to see that the court was prepared to take a pragmatic view of the unusual execution arrangements that had to be employed during the early days of the pandemic.Baker & Anor v Hewston  EWHC 1145 (Ch) (05 May 2023) (bailii.org); Testamentary capacity test: Banks v Goodfellow supplemented with MCA 2005 cross-check (High Court) | Practical Law (thomsonreuters.com)
Estate administration – probate claim barred on grounds of delay
In James v Scudamore  EWHC 996, a claim by the son of a deceased against the validity of a Codicil to the deceased’s Will has been dismissed for delay in accordance with the probate doctrine of laches. The claimant had waited seven years before bringing the claim. The son claimed that the Codicil was invalid for non-compliance with the Wills Act 1837 in several ways including how the Codicil had been signed by the deceased and how it had been witnessed. The defendants cited laches as one of the grounds to their defence. The Court undertook an extensive review of the law of laches including that the following circumstances would bar any claim, and could be referred to as a “probate version of the doctrine of laches”:
- unjustified delay, possibly on its own and certainly when coupled with acts amounting to waiver of the claimant’s right; and
- where the delay has led to others’ detrimental reliance on the inaction, such as distribution of the estate.
Both of these circumstances were evident in this case: the claimant knew what the position was, but after instructing solicitors to investigate his claim, did nothing. The wife acted to her potential detriment on this inaction by making a fresh Will and by administering and distributing her late husband’s estate. The case is interesting for its analysis of the laches doctrine in this probate context. James v Scudamore & Ors  EWHC 996 (Ch) (03 May 2023) (bailii.org)
Trusts – upcoming changes to tax reporting for non-taxpaying trusts
As announced in the Spring Budget 2023, Finance (No.2) Bill 2023 includes new rules to simplify how income tax applies to trusts, estates and their beneficiaries from 6 April 2024. HMRC’s Trusts and Estates Newsletter (April 2023) provides some more details on these changes, which are in summary that:
- trusts and estates with income up to £500 will not pay tax on that income as it arises;
- the default basic rate and dividend ordinary rate of tax that applies to the first £1,000 slice of discretionary trust income will be removed;
- beneficiaries of UK estates will not pay tax on income distributed to them that is within the £500 limit for the personal representatives; and
- technical amendments will be made to ensure for beneficiaries of estates that their tax credits and savings allowance continue to operate correctly.
Estate administration – presumption of death case
In Re Fisher  EWHC 979 (Ch), the High Court held that an executor could apply for a declaration of presumption of death in respect of a missing person under the Presumption of Death Act 2013 (“PDA 2013“) even though the relevant Will had not yet been proved. An executor does not come within the category of persons that would require the court to automatically hear an application for a declaration of presumption of death. The Court therefore had to determine whether the claimant, as a person who intended to prove a Will, had “sufficient interest” for the purposes of section 1(5)(b) of the PDA 2013. The PDA 2013 does not define the term “sufficient interest” and there was no previous authority. In weighing up the arguments, the Court concluded that although the claimant was seeking to rely on “an unproved piece of paper” naming her as executor, if the presumption declaration was granted, there must still be a successful probate application, in which the unproved Will may be challenged if appropriate. Accordingly, there should be no risk to the estate in allowing the application to be made and such a declaration could even be useful as, with an application for a grant in respect of an alternative “last Will”, it would still need to be shown that the missing person is presumed to be dead. Tolley v No Defendant (Re Caroline Fisher)  EWHC 979 (Ch) (28 April 2023) (bailii.org); Executor had sufficient interest to apply for presumption of death (High Court) | Practical Law (thomsonreuters.com)
Estate administration – bereavement damages
The Ministry of Justice has rejected broadening the category of claimants for bereavement damages. Bereavement damages can be claimed under the Fatal Accidents Act 1976 by a wife, husband, civil or cohabiting partner, the married parents of a deceased child and the unmarried mother of a child. Damages can be awarded up to £15,120. Unmarried fathers, parents whose children are over 18, children who have lost a parents, siblings or grandparents are not eligible, which could have human rights implications. In rejecting the expansion of the categories of claimant, the Ministry of Justice commented that this would lead to “intrusive and upsetting investigation of the claimant’s relationship with the deceased person and could also increase the cost and complexity of the proceedings“. No case for extending bereavement damages, says minister | News | Law Gazette
Trusts – Trust Register rules now require additional reporting
Reporting requirements for the Trust Registration Service were extended on 1 April 2023 under The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022. Persons subject to anti-money laundering regulation are now required to conduct ongoing due-diligence throughout a business relationship with a registrable trust, as well as before engaging in the relationship, including:
- scrutiny of transactions to ensure that they are consistent with knowledge of the client and the trust’s business; and
- undertaking reviews of existing records and keeping relevant information up to date.
In particular, discrepancy checks should be undertaken where there is any change, or reasonable belief, that there has been a change in beneficial ownership including to or within classes of beneficiaries. TRSM70020 – Discrepancy reporting: contents: Business Relationships and ongoing monitoring – HMRC internal manual – GOV.UK (www.gov.uk)