Understanding Previous Cases in Estate Planning

In the field of estate planning, having a thorough understanding of previous cases is essential to ensure that all provisions are met effectively and to prevent potential disputes in the future. By examining past cases, individuals can gain valuable insights into how the law operates in practice and apply these lessons to their own estate planning strategies.

Being informed about past cases can help in creating comprehensive and legally sound estate plans that reflect one's intentions accurately.

The Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021 have been amended

The following amendments have been incorporated and apply to deaths in England, Wales and Northern Ireland from 1 January 2022:

  • Raising the threshold gross value of an excepted estate from £1 million to £3 million.

  • Raising the value threshold of an excepted estate’s chargeable trust property from £150,000 to £250,000 (although the total amount of trust property including exempt amounts is limited to £1 million).

  • Increasing the value limit in relation to specified lifetime transfers from £150,000 to £250,000.

  • Amending the definition of “IHT threshold” to include cases where some of the available threshold was used when the first of a married couple or civil partnership died and a claim is made for the unused percentage to be made available against the current estate (the transferable nil-rate band).

  • Simplifying the “alternative information” that is to be produced for both small estates and exempt estates.

  • Removing excepted status from estates of foreign persons where the deceased either owned indirect interests in UK residential property or made lifetime gifts of UK assets above £3,000 in the seven years before death, unless the estate is not liable for IHT.

  • If there's tax to pay, the estate will theoretically be taxed at 40% on anything above the £325,000 threshold when you die (or 36% if you leave at least 10% of the value after any deductions to a charity in your will).

Banks v Goodfellow 1870 

The case concerned the will of John Banks, who owned a considerable estate of 15 Cottages in the Lake District. During his lifetime, Mr Banks suffered from delusions and epilepsy and had spent some time in a lunatic asylum. Mr Banks believed that he was frequently visited by devils or evil spirits and believed that he was being pursued and molested by a Mr Alexander and even the death of Mr Alexander did not stop Mr Banks from believing this. 

On 2 December 1863, Mr Banks made a new will leaving his estate to his niece. He died two years later. His niece died two years after that and her estate, including her inheritance from Mr Banks, passed to her half-brother who was not a relative of Mr Banks. 

The son of Mr Bank’s half-brother brought proceedings to have Mr Banks’ will set aside on the grounds of lack of capacity. 

The proceedings failed and it was held that Mr Banks was mentally capable of making his will. Whilst it was clear that Mr Banks suffered from delusions, those delusions had no impact on the gifts he made in his will. The judgment of Cockburn CJ gave what is now the test for testamentary capacity 

Capacity rules set out in this case allows us to understand that capacity should not be set out so high, there is an understanding of the gifts being given and what his will would entail, his delusions had nothing to do with the gift of estate and thus could not be contested that he did not have capacity in understanding what his actions were.  

Banks v Revenue and Customs [2021] EWCA Civ 1439 

Arron Banks, the millionaire UKIP supporter has lost an appeal case to exempt £1 million in political donations from inheritance tax (IHT).

Mr Banks challenged HMRC’s assessment that he owed just over £160,000 on almost £1 million in donations to UKIP between October 2014 and March 2015, at tribunal hearings earlier in the year.

While donations to political parties that have either two MPs elected at the last general election, or one MP elected and a total of 150,000 votes, are exempt from the tax, HMRC found that because UKIP did not return a single MP to the House of Commons Mr Banks was liable for a payment of £162,945.34. Lord Justice Henderson accepted that the law did discriminate against Mr Banks directly “on the basis that he was a supporter of a party that had secured no seats in the House of Commons at the 2010 general election”. But concluded that HMRC had justified the difference in treatment, meaning it was still lawful, and so dismissed the appeal.

Challen v Challen [2020] EWHC 1330 (Ch) 

Subsequently, in May 2020, Sally Challen was also successful in her application for relief from forfeiture. She had been convicted of her husband's murder in 2010. This was quashed by the Court of Appeal in 2019. She received a conviction for manslaughter by reason of diminished responsibility due to her husband's abusive and coercive behaviour during their 40-year marriage.  

It was held that the deceased 'undoubtedly contributed significantly to the circumstances in which he died' and 'without his appalling behaviour over so many years, the claimant would not have killed him', and so the circumstances justified modification of the forfeiture rule, and Ms Challen was permitted to inherit her late husband's estate. 

Dunbar v Plant [1998] ch 412 lead majority judgement that one cannot gain from their own criminal action.  

The cases together suggest that the court will approach an application for relief by considering first, whether the forfeiture rule applies to the case at all and second, whether the court ought to exercise its discretion to modify the rule in the circumstances. It is the answer to the second question which is likely to be more difficult to anticipate. Though the two cases provide examples of the court’s approach to the exercise of its discretion, their usefulness should not be overstated. Whether the court exercises its powers to modify the rule in a future case is likely to be highly fact-sensitive, turning on the circumstances of the case. 

The women did not plan to kill the husband so why should his wishes not be met on the bases that she was carelessly driving- at age 74 people tend to be more dangerous on the road. Protecting wishes and intent even during accident.  

Heather Ilott case

Three animal charities have won a case at the Supreme Court against a woman cut out of her mother's £500,000 will.

Heather Ilott's mother Melita Jackson left most of her estate to charities but not a penny to her daughter when she died in 2004. Mrs Ilott was awarded £50,000 by a judge, which was tripled on appeal. The charities challenged the increase, saying people should be free to choose beneficiaries, and the court agreed she would receive only the original amount. Mrs Ilott, an only child, was rejected by her mother at the age of 17 after she left home in 1978 to live with her boyfriend, Nicholas Ilott, whom she later married.

She and her mother never reconciled their differences, and when 70-year-old Mrs Jackson died in 2004, she left nothing for her daughter, but almost all of her £486,000 estate to The Blue Cross, the Royal Society for the Protection of Birds (RSPB) and the Royal Society for the Prevention of Cruelty to Animals (RSPCA). The court heard that mother-of-five Mrs Ilott, from Great Munden, Hertfordshire, had no pension and was living on state benefits when she appealed over the will and was awarded £50,000 by a district judge in 2007. The sum was increased by the appeal court in 2015 - £140,000 to buy her housing association property, and another £20,000 structured to allow her to keep her state benefits. The court ruled that Mrs Ilott would otherwise face a life of poverty because she was on benefits and could not afford to go on holiday or buy clothes for her children.

When Melita Jackson died in 2004 she made it crystal clear she didn't want her estranged daughter, Heather Ilott to benefit, and so left her £500,000 estate to three animal charities, with which she had no real connection. Before her death in 2004, Mrs Jackson wrote in a letter to lawyers: "I can see no reason why my daughter should benefit in any way from my estate. I have made it clear to my daughter... that she can expect no inheritance from me when I die." She explicitly instructed the executors of her will to fight any claim Mrs Ilott might make after her death. The relationship between mother and daughter worsened when aged 17 Mrs Ilott eloped with a man her mother disapproved of, but who she remains married to. There were failed reconciliation attempts which were blamed on both sides.

This case is detrimental as it highlighted how the courts proceeded with protecting trying to protect Melita Jacksons wishes despite the Inheritance (Provision for Family and Dependents) Act 1975 which traditionally meant that a much larger sum would have been left to Mrs Ilott. As the only daughter of Mrs Jackson she should have inherited the majority of the estate but Mrs Jackson was very specific in her wishes to have her daughter to be removed and not inherit anything.