A legacy of confusion
September 28th, 2013
Recently estate planning specialists have warned of the need to learn lessons from the recent furore over a £520,000 bequest to ‘the government of the day’. The situation arose because a retired nurse who lived in a council housed bequeathed her estate to the ‘government’ via a clause in her will worded as follows:
‘I Bequeath all my estate both real and personal… whichever Government is in office at the date of my death for the Government in their absolute discretion to use as they may think fit’.
Whilst this statement initially appears clear and succinct, on a closer reading the question arises as to what exactly the donor intended her money could potentially be used for? Was it, as the two political parties initially decided, that the monies could be split between them (the Conservatives and Liberal Democrats) and put into their party funds for future election battles? Or was the intention for the monies to be used for the good of the nation? Or, given she was a retired nurse, did she really intend it to be used for the NHS? None of this can be known as the wording of the will did not give sufficient indication.
By initially placing the monies into their ‘coffers’ the political parties had, in theory, done nothing wrong as they had absolute discretion to use the monies as they saw fit. However, as a result of the political fallout and negative press, the monies have since been passed onto the treasury to pay down some of the national debt and ease what was potentially a huge political embarrassment. Of course whilst it can be argued that the Governments initial use of the legacy was in all probability contrary to the testators true wishes, arguably some responsibility lies with the draftsman of the will in either not obtaining a clearer understanding of what the donor actually wanted or leaving too much open to interpretation.
What this does illustrate is that a will is a very important document that can give rise to many problems not just for the beneficiaries but also the executors of the estate as it is their job to carry out the wishes of the deceased. It is therefore essential that care and consideration is given to the precise words that are used to give effect to those wishes.
Even where instructions are clearly defined it is also worth considering that there can still be potential practical implications where those instructions are too inflexible.
For example, in 1928 an anonymous donor set up the National Fund to inspire the government to move quickly to pay off the UK’s debt. No doubt this was on the back of calls from the government in 1919 after the first world war for the wealthy of the nation to help reduce the government’s debts. The national fund was started with £500,000 and the donor specified that ‘the fund should be held in trust until the country had collected enough money to pay off the whole debt’.
Now this seems a very generous and specifically worded legacy that could not cause confusion or create any doubt as to how and where the monies should be used, but (there always is a but!) the monies are still in trust and there is no expectation in the future that these monies will be used towards the intended request.
It may seem inconsequential given the bequest was only £500,000, but as the trust was set up in 1928 and due to some good investment decisions, the trust is now currently worth £350,000,000 and is paying out fees of upwards of £1m a year. Despite attempts by the trustees to get the trust changed to allow either some of all of the monies to be used if not for the national debt then at least for some charitable basis, the legislation and the terms of the will are quite clear and specific.
This is another example of a will/bequest that although quite clear in its intentions had not allowed for the wider implications if the original request could not be fulfilled. The result was that no contingencies or imposed timeframes were factored in. For example the national debt request could have been caveated with ‘until the country had collected enough money to pay off the whole debt, however if 100 years has passed and enough money has not been collected then the residual funds should be used to clear as much of the debt as possible’.
Hopefully this article highlights how critical the words that are used are when writing wills or other legal documents such as trust deeds. Careful consideration needs to be given to ensure that such documents accurately reflect the intentions of the donor and are drafted with sufficient consideration of other possible and unintended consequences.
The Financial Conduct Authority does not regulate Will writing or trust advice