Wills, Inheritance and Trust Disputes

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Wills, Inheritance and Trust Disputes have increased over recent years due to growing affluence, increased consumer rights awareness, the growth of more complex family structures and an ageing population.

However, by failing to make a will, almost two out of three Britons risk leaving a financial nightmare for family members when they die, warns the Law Society.

http://www.lawsociety.org.uk/news/press-releases/britons-with-no-will-should-act-fast-warns-law-society/

Research  from the Dying Matters Coalition revealed that only 36 per cent of British adults say they have written a will, while 83 per cent reported being uncomfortable discussing their dying wishes. The research coincided with Dying Awareness Week.

  • Those who die without a will die “Intestate”, and this can result in a complicated and long drawn-out battle for those left behind. When a person dies intestate, the State decides who inherits according to a set procedure. As such their friends, favourite charities and relatives may get nothing; dependants and co-habitees may have to apply to the court because their interest would otherwise be ignored.
  • A will is always fundamental, but this is critical for co-habitees who are not married or in a registered civil partnership. There is no provision for co-habitees, and “common law” partners are not recognised either. People with children or dependents will need to make it clear who will look after or provide for them.

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  • A badly drafted will can cause more problems than no will at all, so the Law Society advises against using unregulated will writers. All solicitors are subject to strict regulation to ensure that they deliver the best service to their clients, unlike unregulated will writers. Solicitors are unparalleled in the will writing market as only they have the breadth of training to consider wider implications and complex issues, including tax and family law.
  • Whether you are involved in a claim, or considering your options, it is important to get the best legal advice.  Disputes over a Will or Trust can be distressing for all concerned.  A sensitive and practical approach is required, to  resolve family and financial disputes on a pragmatic basis.  A non-adversarial approach should be tried out of court, involving pre-action protocols, Mediation / Alternative Dispute Resolution and deeds of variation.  However, court action may be needed.
  • We act for administrators, executors, trustees, beneficiaries and dependants regarding all aspects of contentious probate and trust matters. Our team have in-depth experience of problematic and high value disputes or difficulties following the death of a family member involving houses, businesses, partnerships, shareholdings, property, farms, land holdings and other assets, including property abroad.

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J Paul Sykes is one of fewer than 500 Solicitors and Barristers with the necessary experience and skill to be appointed a Member of “ACTAPS”, the Association of Contentious Trusts and Probate Specialist, set up in 1997.

We support the voluntary code of the Association of Contentious Trust & Probate Specialists

http://www.actaps.com/

We advise and act in disputes including:

1. DISPUTED WILLS

Common reasons for a Will dispute include:

  • Invalid procedure:

For a Will to be valid it must be in writing, signed and witnessed in the correct manner.  This may be a problem with homemade Wills.  A correctly drafted Will should revoke earlier Wills, but this needs to be expressly set out.

  • Undue Influence:

The Will must be made voluntarily.  If the deceased was pressured or coerced into making a Will, it may be deemed as invalid.

  • Mental Capacity:

For a Will to be valid the person making the Will must have sufficient mental capacity at the time the Will was signed.

  • Knowledge, approval, fraud and forgery:

If someone is tricked into signing a Will or there has been some other fraudulent activity then the Will may be deemed invalid.

  • Negligent drafting:

The Will does not reflect the wishes of the deceased because it was drafted negligently or contrary to the instructions of the deceased.  Even if a Will is valid, you may be able to claim against the solicitor or other professional if they drafted the Will negligently.

We advise on all issues that could give the right to seek a declaration that a Will is invalid and should be disregarded completely.

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2. CONTENTIOUS PROBATE 

“Contentious Probate” – The legal term for a dispute regarding inheritance or the administration of a deceased’s Estate.  This can include disputes about a Will or a dispute regarding Probate.

“Probate” – The process of managing the affairs of a deceased person. When someone dies an application is made to the Probate Registry to get permission to deal with their affairs.

“Grant of Probate” -Issued by the Probate Registry where there is a Will, authorising the Executors or Personal Representatives to administer the deceased’s Estate.

“Grant of Letters of Administration” -Issued by the Probate Registry where there is no Will, authorising the Administrators or Personal Representatives to administer the deceased’s Estate.

Although the majority of Estates are administered without disputes arising, where there are problems we can advise on the law as to who should have control of an Estate and how it should be divided and managed.

It is important for clients to seek legal advice promptly so as to preserve the assets of the Estate, for example through lodging a caveat.  Speed is essential as some statutory claims require the issue of court proceedings within six months.

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3. TESTAMENTARY CAPACITY 

For a Will to be valid, the person making the Will (“Testator”) must have sufficient mental capacity at the time the Will was signed.

We are experienced in making challenges to, or upholding the validity of a Will.  This is an involved area of law and detailed, careful preparation is essential.  So too is a clear understanding of the criteria that Courts apply and the evidence available.  Thorough research and obtaining sufficient evidence to pursue the claim is required to prove the position, for example on issues regarding the deceased’s lack of capacity, coercion, or undue influence by another.

4. DISPUTES INVOLVING TRUSTS

A Trust is a legal relationship where someone (“the Settlor”) settles or transfers assets to another individual or a company (“Trustees”).  The Trustees hold and manage these assets for the beneficiaries of the Trust, chosen by the Settlor.  A Trust can be established during your lifetime or following your death.

Trustees have serious statutory and common law obligations, they must:

  • act with reasonable care and skill;
  • act impartially and fairly;
  • administer the Trust in accordance with its terms;
  • act jointly if more than one;
  • be ready with the accounts when due;
  • must not cause loss to the Trust due to any conflict of interest.

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5. CLAIMS FOR REMOVAL OF OR SANCTIONS AGAINST EXECUTORS, ADMINISTRATORS, TRUSTEES

A claim for breach of Trust may arise where it is alleged that the Trustees have failed to comply with their duties and the Trust and beneficiaries have suffered consequential loss. Such claims can have serious consequences for all involved.  It is essential to ensure advice is sought at the earliest stage.

6. DISAPPOINTED BENEFICIARIES 

Although in making a Will the Testator can dispose of their assets as they wish, this is subject to a number of potential restrictions including claims under the Inheritance (Provision for family and Dependants) Act 1975.  Such claims may be pursued by family and dependants where the terms of a Will (or the rules of intestacy where there is no Will) fail to make reasonable financial provision for the complainant.  Often such claims are pursued together with other equitable remedies e.g. proprietary estoppel, resulting and constructive trusts.

It may be argued that insufficient provision has been made for those left behind. The Courts will, where the legal criteria is satisfied, make an award for reasonable provision for dependents from the Estate.

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7. INHERITANCE ACT CLAIMS

Any individual who depends on you financially or whom you have maintained at the time of your death may have a claim against your estate if you have not left them anything in your Will or made no other financial provision for them.

Can I claim under the Inheritance Act?

To find out if you can make a claim under the Inheritance Act, it is important to take professional advice as soon as possible.  If you have not been properly provided for in a Will when you should have been, you may have a valid claim.  You will need to show that you are:

  • A husband, wife, civil partner or cohabitee of the deceased.
  • A former husband, wife or civil partner of the deceased who was
  • receiving maintenance and has not remarried/entered into a new civil partnership.
  • A child of the deceased.
  • Any person who was treated as a ‘child of the family’ of the deceased.
  • Any person who was partly or wholly maintained by the deceased immediately before the death.

AND, that it is within 6 months of the date of Grant of Representation. This is a document issued by the Court which gives permission to those named in the grant to distribute the deceased’s estate.

8. PROMISSORY ESTOPPEL AND PROPRIETARY ESTOPPEL

These are Rules of Equity, where a person is prevented from denying that a certain state of affairs exists, having previously stated that it does.

“promissory estoppel”:  if an individual states that their strict legal rights will not be insisted upon, they cannot later try to assert them if a third party has relied on that declaration to their detriment.

“proprietary estoppel”: if an individual permits or persuades a third party to act to their detriment in respect of land, the first party will be “estopped” from backing out or refusing to grant something that they encouraged the other person to expect.

9. NEGLIGENTLY DRAFTED WILLS, AND CLAIMS AGAINST EXECUTORS

Professional Negligence Claims could be considered against Will Writers, Solicitors and Banks acting as Trustees: there is a duty of care owed to those who may be adversely affected.

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10. DISPUTED POWERS OF ATTORNEY

A Power of Attorney is a legal document where the donor or “Principal” transfers the power to manage their financial affairs to another person, the “Attorney”.  A Power of Attorney can be used when it is easier for someone else to act, or where the donor is unable to do so.  An example would be where someone serving abroad in the Armed Services appoints a Parent as their Attorney to deal with their finances whilst they are away on duty.

“Lasting Power of Attorney”:

This is where an Attorney is appointed to act for you if and when you become mentally incapacitated.  A Lasting Power of Attorney has to be registered with the Court of Protection before it can be used.  A Lasting Power of Attorney replaced the previous “Enduring Power of Attorney” in October 2007.

The old system was vulnerable to abuse and fraud and often the requirement to register at the Court of Protection was ignored.  The new Lasting Power of Attorney avoids this problem, because the Power will not be valid until it is registered. Nevertheless, Enduring Powers of Attorney will be around for many years to come and disputes will continue.

If you object to someone taking over the affairs of a close relative, you may be able to prevent this.  Specific advise is necessary on the appropriate steps. This may include an application to the Court of Protection.  You may be able to remove someone who is abusing their position. All decisions will be made in the best interests of a vulnerable person.  Relevant factors may be the size of any assets involved, the previous wishes of the vulnerable person and the character of the person proposing to take over.

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11. Bereavement Counselling:

First reactions to the death of someone close – What happens to us when we lose someone? For most people, bereavement is the most psychologically distressing experience they will ever face. The death of a significant person is a devastating loss. Everyone experiences grief differently and there is no ‘normal’ or ‘right’ way to grieve. How we react will be influenced by many different things, including our age and personality, or cultural background and religious beliefs, our previous experiences of bereavement, our circumstances and how we cope with loss.

Bereavement counselling is available from a variety of sources, for example:

www.crusebereavementcare.org.uk/www.counselling-directory.org.uk/bereavement.html

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12. Digital Legacy

The Dying Matters Coalition research also revealed that 71 per cent of people said they have never thought about what would happen to their digital legacy, such as social media and online accounts, online photos and music, when they die. The Law Society encourages people to leave clear instructions about what should happen to their digital assets after their death. Having a list of all your online accounts, such as email, banking, investments and social networking sites will make it easier for family members to piece together your digital legacy, comply with your wishes and could save time and money. Not making your digital legacy clear could mean important or sentimental material – such as photographs on social networks – is never recovered.

 

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Court of Appeal upholds power of English Court to commit a foreign director for contempt

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The Court of Appeal has unanimously upheld the High Court’s decision that the Managing Director of the Claimant (domiciled and resident in Saudi Arabia) could be served with committal proceedings for contempt of cour

BACKGROUND

In the lower court, the Claimant companies obtained a ‘without notice’ injunction against the Defendants. This was cancelled when the judge at first instance found that the Claimant companies were in breach of their obligations to give full disclosure. They had also misled the court and broken an undertaking to preserve evidence. Consequently one of the Defendants asked the court to punish the Claimant companies for contempt of court. Additionally, the Defendant made an application for committal (imprisonment) of  the Claimants’ Managing Director. This was on the basis that he was also in contempt of court , although he was not personally bringing the case in his name. The judge ordered service of the application for contempt on the director out of the jurisdiction.

The director appealed to the Court of Appeal. He argued that the Court had no power to make any order against him because he was outside the territorial jurisdiction.

CASE

Dar Al Arkan Real Estate Development Co & Anor V Al Refai & Ors [2014] EWCA Civ 715

http://www.bailii.org/ew/cases/EWCA/Civ/2014/715.html

 

COMMITTAL

Under CPR r81.4 a committal order can be made against the director of a company which is in breach of a judgment, order or undertaking.

The Court of Appeal accepted that the legislative intention behind the provision must include dealing with contempt of its orders by companies with foreign directors. Although CPR r81.4 does not specifically state that it is effective out of the jurisdiction, if this was not the case, the power of the English courts to ensure compliance with its orders would be

significantly weakened”.

The Court of Appeal distinguished the position where it had previously been decided that the English courts did not have jurisdiction to order the examination of a foreign director of a debtor company under CPR r71. The rationale was the nature of committal proceedings is very different from the power of the court under Part 71 to obtain information from judgment debtors.

The Court of Appeal upheld the Judge’s exercise of discretion to allow service out of the jurisdiction of the Notice of Committal. This was because the application constituted a “Claim Form” under the definition in CPR r6 as it commenced “proceedings”.

The Court of Appeal also referred to Article 22(5) of Regulation 44/2001 of the Brussels I Regulation. This states that, in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced shall have exclusive jurisdiction,

regardless of domicile”.

The trial judge held that this Article did not apply because the director was not domiciled in a European Union Member State.

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The judge said that he was bound by the Court of Appeal’s decision in Choudhary & Ors v Bhatter & Ors [2009] EWCA Civ 1176. The Court of Appeal however indicated that, in view of ECJ decisions, there was a “compelling” argument that Choudhary was incorrectly decided and that the English courts did have jurisdiction under the Article, no matter where the defendant is domiciled.

As such, there was no reason not to extend the jurisdictional rule to parties and directors domiciled outside of the EU. Their non-domiciliary status is irrelevant and does not limit the Court’s powers to enforce its orders.

COMMENT

It would have been damaging for compliance with  the Overriding Objectives to deal with cases justly, and unfair if there was a weakened regime  for directors resident abroad, or directors of foreign companies.

The decision shows that the court is prepared to extend the reach of sanctions where this is in the public interest. Ultimately this could result in committal for contempt of court, even for a foreign director,  where there is continued disobedience of a court order.

 

Court of Appeal Decision: Assessing Damages on a Freezing Order Cross-Undertaking

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The Court of Appeal has for the first time given guidance on how damages are to be awarded on a cross-undertaking in damages on a freezing order. This clarifies recent uncertainty on the principles in first instance decisions.

Whenever the Court makes an interim order pending trial, such as a freezing order, search order or injunction, invariably the Court requires an undertaking from the Claimant. This “cross-undertaking” makes the Claimant pay damages to the Defendant if it is later decided that the Claimant should not have been granted the interim order.

The Court of Appeal has reiterated the analogy of contractual principles that should apply to assessment of damages under a cross-undertaking. That is with the proviso that there is in reality no contract and there has to be room for exceptions.

In Abbey Forwarding Ltd (in liquidation) and another v Hone and others (No 3) [2014] EWCA Civ 711; [2014] WLR (D) 236  giving the lead judgment of the Court of Appeal, McCombe LJ held

‘When determining questions of compensation for loss arising as a result of a freezing order and the undertaking in damages therein, the correct approach was that the remote consequences of obtaining an injunction were not to be taken into account in assessing damages but that logical and sensible adjustments might well be required simply because the court was not awarding damages for breach of contract but was compensating for loss caused by the injunction which was wrongly granted.’

This was the correct approach where a Defendant who is the victim of an unfair injunction should be compensated for their loss. However, a Claimant should not be fixed with liabilities that no reasonable person could have foreseen, unless the Claimant knew or ought to have known of other circumstances that were likely to give rise to that type of loss.

Terms such as “common law damages” and “equitable compensation” did not assist.

The aggreived Defendants contended that they had been successful entrepreneurs with a track record of commercial and investment success which had been impeded for some 20 months because of the wrongful freezing order.  On appeal it was confirmed that whilst principles of remoteness of damage in contract ought to apply in the circumstances, there should be flexibility so as to allow logical and sensible adjustments. This was because the Court was not awarding damages for breach of contract, but was compensating for loss caused by the injunction.

Vos LJ added that general damages could also be included within the cross-undertaking in some cases where appropiate, for stress, loss of reputation and general loss of business opportunities and disruption caused by inappropriate policing of the injunction.

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