In recent years, the estate planning profession has seen an increase in the number of challenges to Wills and their validity on the grounds of a believed incapacity. There have been many high-profile cases highlighting the importance of capacity when making a Will.
One such case, profiled in The Daily Mail was particularly important as it highlighted the need for you as a consultant to be able to assess capacity and keep contemporaneous notes surrounding this.
In this case, a mother (with two adult children) disinherited one of them (Sue Bond) and left the bulk of her estate to the other (John Clitheroe) resulting in a challenge and lengthy (not to mention costly) high court battle. The outcome was that the mother was deemed not to have capacity on the grounds of multiple delusions – including a false belief that her daughter had stolen her collection of Harry Potter books. The judge found in favour of Ms Bond resulting in Mr Clitheroe having to pay £500k in legal fees.
The overarching principle here is that we draft Wills for clients on the basis that we want to help them leave their assets to loved ones and Mr Clitheroe and his legal team have argued that this judgement seriously erodes the principle of testamentary freedom.
This case serves as a stark reminder that we, as professionals, must ensure that our assessment of the capacity of clients is evidenced to prevent future claims of this nature. Such claims have a serious ability to erode the trust in our profession.
Let’s go back to basics briefly and remind you that when assessing capacity for Wills, the case and principles are defined in Banks and Goodfellow. Banks v Goodfellow is a landmark case in English Succession Law that was decided by the Court of Common Pleas in 1870. The case involved a dispute over the validity of the Will of a man named John Banks, who had died in 1869. The Will was challenged on the grounds that Banks did not have the necessary mental capacity to make a valid Will.
The court ultimately ruled that Banks did have the necessary capacity to make a Will, and in doing so, it established the legal test for testamentary capacity that is still used in England and Wales today. The case was named after the two parties involved in the dispute: John Banks and Richard Goodfellow, who was the executor of Banks’ Will.
John Banks was a wealthy farmer who had made a Will in 1867, leaving his estate to his sister and her children. However, when Banks died in 1869, a dispute arose over the validity of the Will, with some family members claiming that Banks did not have the necessary capacity to make a valid Will.
The case went to court, and the judge ultimately ruled that Banks did have the necessary capacity to make a Will. In doing so, the judge set out four key criteria that a person must meet in order to have testamentary capacity, which are still used in England and Wales today
The decision in Banks v Goodfellow was a significant one because it established a clear legal test for testamentary capacity that has stood the test of time. It is still used today to determine whether a person has the necessary capacity to make a Will, and it is important to be aware of this test when advising their clients on their Wills, and Trusts.
In this case, the court set out four key criteria that a person must meet in order to have testamentary capacity and be able to make a valid Will. These criteria are:
- The testator must understand the nature of the act of making a Will and its effects.
- The testator must understand the extent of the property they are disposing of.
- The testator must be aware of the people who might reasonably have a claim on their estate.
- The testator must not be suffering from any disorder of the mind that would influence their decisions about their estate.
Another important case to consider when advising clients on their Will is Key v Key. In this case, the court established that where a client has been recently bereaved (such as a spouse, child, or another such close person), there is a greater likelihood that they may be acting under the influence of grief or emotion when making decisions about their Will.
Key v Key is a legal case that established an important principle in English Succession Law relating to the exclusion of family members from an individual’s Will. In this case, the court held that where a testator has excluded a family member from their Will, and that family member is a spouse, child or other close relative, there is a presumption that the testator had a good reason for doing so.
However, the court also held that this presumption can be challenged if there is evidence that the testator did not have a sound and rational reason for excluding the family member. In particular, the court noted that if the testator had recently been bereaved, this may have affected their mental state and decision-making process, and could be relevant in assessing whether the exclusion of the family member was sound and rational.
Therefore, the principle established in Key v Key is that financial advisers and estate planning professionals should be mindful of the circumstances surrounding a client’s decision to exclude a family member from their Will. This obviously needs to be evidenced in your notes.
If the excluded family member is a spouse, child, or close relative, there is a presumption that the testator had a good reason for doing so. However, if there is evidence that the testator did not have a sound and rational reason for excluding the family member, this presumption can be challenged.
It is also important for you to check whether the client has been recently bereaved, as this may be relevant in assessing the client’s mental state and decision-making process when excluding a family member from their Will. Overall, the principles set out in Key v Key are aimed at ensuring that the wishes of the testator are properly respected, while also protecting the rights of excluded family members who may have a legitimate claim on the estate.
We’re going to be hosting a training session on capacity and we’d love for you to attend. You can book using the link below. Should you have any questions regarding the capacity of one of your clients, reach out to us for guidance. Please provide us with as much information as possible to enable us to provide the best possible guidance.