Legacy Management: latest developments September 2022
Insight
Recent 1975 Act spouse claim: Ramus v Holt
A widow’s claim for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 following a 48 year marriage has failed. She raised an unusual argument that reasonable provision could be achieved in part by an order amending the terms of the trust to replace the trustees with new trustees agreed between the parties or appointed by the court.
The court found that there was no power under the Act to remove the trustees of an existing settlement and that interpreting the Act to read such a power into it would undermine the law concerning the removal of trustees and other statutory provisions in the area.
The Judge was dismissive of the claim, saying “it is a wholly novel argument that reasonable financial provision had not been made, not because of the terms of the will itself, but because a claimant objects to the identity of a trustee or trustees based on a personality clash with one of them.”
Ex gratia payments under the Charities Act 2022
The provisions in the Charities Act 2022 authorising charities to make ex gratia payments are due to be implemented this autumn. An ex gratia payment is where trustees consider the charity owes a “moral obligation” to make such a payment but where there is no legal obligation to do so.
This is a welcome development, because it places in the hands of charity trustees the ability to decide whether there is such a moral obligation without reference to the Charity Commission (provided they are within the thresholds set out).
Such payments can be very helpful in resolving some probate disputes quickly and keeping legal costs down for all involved where the facts indicate there is a moral obligation on the charity to make a payment. Frequently, this arises where there is evidence a testator intended to amend their Will to make a gift to another beneficiary as well as to the charity but where the testator died before a new Will was drawn up or executed.
Whilst the Charity Commission’s operational guidance recognises that de minimis ex gratia payments (£1000 or less) are unlikely to attract its regulatory intervention, it is helpful to have the certainty of the new power up to the thresholds that are now set out in the Act. For larger charities with annual income over £1million, the maximum ex gratia payment would be £20,000 (this is per payment rather than an annual threshold).
"This is a very welcome development that allows charities to make an ex gratia payment without the time and effort of seeking an order from the charity commission."
Elizabeth Jones, Partner at Farrer & Co and Chair of the Charity Law Association
Further commentary from the Charity Commission on the changes can be found here.
If you require further information about anything covered in this briefing, please contact Elizabeth Jones, Henrietta Mason, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, September 2022
