Electronic wills need safeguards, warns Institute of Legacy Management

In its reply to a Law Commission consultation on modernising legacies, the ILM says tighter regulation and standardisation of online will-writing platforms is needed

Charities could miss out on legacies if electronic wills are introduced without the necessary safeguards and standards to ensure they can be enforced in law, the Institute of Legacy Management has warned.

The ILM’s statement comes in response to a Law Commission consultation that considers ways of modernising legacy law and making sure it is easier to implement people’s wishes as noted in their wills. The consultation closes today.

The Law Commission’s proposals include making provision for electronic wills, which are loosely defined as using digital technology during the process of creating or executing a will, and giving courts the power to recognise a will where formal rules have not been followed but the will-maker has made their intentions explicitly clear.

In its submission to the consultation, the ILM said the proposals failed to acknowledge that a growing trend for producing electronic wills was already having an effect.

The ILM said tighter regulation and standardisation of online will-writing platforms could help to ensure that new technology was introduced while retaining essential safeguards and standards.

It said the consultation allowed the Lord Chancellor to introduce electronic wills without specifying the timeline or level of public consultation required.

Chris Millward, chief executive of the ILM, said: “The consultation seems to defer all conversation on technology in the will process, suggesting it’s a future problem. But we know that people writing wills online is having an impact now and requires considerable consideration, fast.

“Our members are already seeing the consequences of wills made online and, as we become more reliant on technology, this is likely to increase. There is a risk of badly drawn-up wills resulting in donors’ final wishes being frustrated and failing, which means charities and their beneficiaries will miss out on vital support. The introduction of fully electronic wills would complicate the process further.”

The charity legacy consortium Remember A Charity also warned in its submission to the consultation that safeguards were required to make sure electronic and video wills were not easily challenged in court. But it welcomed the idea of bringing wills “out of the dark ages” through new technology.

Rob Cope, director of Remember A Charity, said: “We need to be mindful that relaxing the laws around what makes a will legally valid could create uncertainty and increase the scope for legacy disputes. This means having more accessible, regulated will-writing opportunities, while ensuring appropriate checks are in place to test mental capacity and protect against undue influence.

“With the number of contested wills rising, charities are keen to avoid the emotional, financial and reputational costs associated with inheritance disputes, defending donors’ wishes and their own legal obligation for funds allocated to them.”

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Legacy income ‘could grow by 2.7% a year for next five years’

But the charity legacy consortium Legacy Foresight says the rate of growth could vary depending on the Brexit deal

Charity legacy income could grow by up to 2.7 per cent a year over the next five years, Legacy Foresight has predicted, but the charity legacy consortium said growth could vary, depending on the strength of the Brexit deal.

Legacy Foresight’s latest market forecasts show that legacy income across the sector will grow from the current level of £2.82bn to £3.26bn in 2021.

This would represent an increase of 2.7 per cent a year, but would be less than 1 per cent a year after taking inflation into account.

But the consortium acknowledged that this was only one of a range of possible outcomes for legacies depending on the impact of Brexit. The most optimistic forecast suggests a 4.2 per cent annual market growth, but the most pessimistic prediction would see a growth of just 0.9 per cent.

This means a poor Brexit deal could result in legacy income being £500m lower in 2021 than it would be in a scenario where Britain negotiates a favourable deal, according to Legacy Foresight.

And the most optimistic prediction is lower than the average growth rate of 6.5 per cent a year in the five years leading up to the Brexit referendum.

But even the most pessimistic prediction meant legacy income would still be more than 5 per cent higher than it was last year, Legacy Foresight said.

Chris Farmelo, director of Legacy Foresight, said “The good news is that we do not expect to see a return to the situation after the global financial crisis in 2008, when sector incomes fell and then stagnated. In fact, the number of bequests received by UK charities is predicted to rise over the coming years, due to the climbing death rate.

“However, the value of those bequests will grow much more slowly than of late, due to the uncertain economic situation.”

Farmelo said the average bequest, currently worth about £46,600, would grow by just 1.3 per cent between 2017 and 2021, compared with 2.8 per cent in the preceding five years.

Chris Millward, chief executive of the Institute of Legacy Management, said the projected figures were “extremely interesting” given the level of confusion about what Britain’s exit from the EU might mean.

“While we hope that the central and optimistic forecasts for future legacies are closer to the truth, we are wary of the potential drop in legacy income, which will, of course, have a negative effect on our charity members and the good causes they support,” he said.

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Charities in £340k legacy dispute

Four charities, including the Dogs Trust, are involved in a dispute over a will by Tracey Leaning, who died from cancer in 2015

– This story was corrected on 22 August 2017; please see final paragraph

Four charities, including the Dogs Trust, are involved in a dispute over a £340,000 will after the charities were cut out of the final estate, according to media reports.

The Daily Telegraph newspaper has reported today that Dogs Trust, World Animal Protection, Friends of the Animals and Heart Research UK are involved in a dispute over a will by Tracey Leaning, who died from cancer in 2015.

The newspaper says that Leaning had written a will in 2007 that left her property and money to the charities, worth an estimated £340,000.

But following her diagnosis in 2014, Leaning wrote another will, which was handwritten and witnessed by a neighbour, that left her house, belongings and savings to her partner, Richard Guest, the newspaper says.

The newspaper reports that Guest met Leaning between the completion of the first and second wills, and has offered the charities £60,000 and the house in trust to settle the case.

The Dogs Trust was unable to provide a comment before Third Sector’s deadline.

– The story originally said the charities were challenging the will at the High Court but no proceedings have been issued

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Charities to challenge £340k legacy in High Court

Four charities are contesting a will by Tracey Leaning, who died from cancer in 2015

Four charities, including the Dogs Trust, are challenging a £340,000 will at the High Court after the charities were cut out of the final estate, according to media reports.

The Daily Telegraph newspaper has reported today that Dogs Trust, World Animal Protection, Friends of the Animals and Heart Research UK are challenging a will by Tracey Leaning, who died of cancer in 2015.

The newspaper says that Leaning had written a will in 2007 that left her property and money to the charities, worth an estimated £340,000.

But following her diagnosis in 2014, Leaning wrote another will, which was handwritten and witnessed by a neighbour, that left her house, belongings and savings to her partner, Richard Guest, the newspaper says.

The newspaper reports that Guest met Leaning between the completion of the first and second wills, and has offered the charities £60,000 and the house in trust to settle the case.

The Dogs Trust was unable to provide a comment before Third Sector’s deadline.

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Legacy income falls despite rising death rate

The legacy consortium Legacy Foresight says the value of estates has fallen following the Brexit referendum

The value of legacy income has fallen slightly in the year to 1 June 2017, but the number of bequests received has risen due to climbing death rates, Legacy Foresight has said.

Figures released by the charity legacy consortium Legacy Foresight in its Legacy Bulletin show that its 83 members’ legacy incomes fell by 1.1 per cent on the same period the year before, to £1.41bn.

But, it said, rising death rates had boosted the number of legacies being received and the total figure rose 3.2 per cent to 54,500 in the 12 months to 1 June compared to the year before.

The Legacy Bulletin said income from bequests had grown strongly in the first half of 2016, but had flattened off since the summer – when the vote on leaving the European Union was held.

Legacy Foresight’s bulletin for the first quarter of 2017, published in May, also warned uncertainty following Brexit was impacting on the amount charities recived from wills.

Part of the problem, the latest bulletin said, was that the value of residual bequests – where people leave specific amounts of their estate to people in their lives and then whatever is left goes to charity – had fallen.

“Flagging house prices and jittery stock markets appear to have affected average residual values,” the bulletin said.

“In the year to June 2017 average residual bequest values were £57,000; that’s a fall of 3.7 per cent on the record high of £59,100 in the year to June 2016 (the period leading up to the Brexit referendum).”

It said that if the economy followed expectations and slowed further over the next two or three years as the full details of the Brexit negotiations were developed and realised, this would further dampen the value of residual bequests.

Ultimately, it said, Legacy Foresight’s central market forecast suggests that legacy incomes will grow by 2.7 per cent a year over the next five years, which it said was “considerably slower than in recent years, but growth nonetheless”.

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Modernising of legacy law is vital, says Remember A Charity

The legacy consortium is backing proposals in a consultation on the issue launched by the Law Commission

Plans to modernise the law on the making of wills could be crucial to encouraging more people to leave charitable donations in their bequests, according to the legacy consortium Remember A Charity.

The Law Commission has launched a consultation on proposed changes to legacy law, which it says is outdated and often does not allow courts to implement people’s wishes, even if they are clear, because they have not followed legal procedure entirely correctly.

Under the new proposals, the Lord Chancellor would have the power to make provision for electronic wills and the age for being able to make a will would fall from 18 to 16.

The commission has proposed giving the courts the power to recognise a will in cases where formal rules have not been followed but the will-maker has made their intentions clear.

It has also put forward measures that would overhaul the rules protecting anyone who makes a will from being unduly influenced by another person.

The proposals include an update to the rules around mental capacity to reflect modern medical understanding of conditions such as dementia and to provide statutory guidance for doctors and other professionals when assessing someone’s mental capacity.

Rob Cope, director of Remember A Charity, said the moves could raise millions for charity each year by closing the gap between the 35 per cent of people who say they would like to leave money to charity in their wills and the 6 per cent who actually do.

“When you consider that hundreds of thousands of people in the UK die intestate each year, leaving no clear guidelines as to how any assets should be divided among their family, friends and good causes, it is long overdue that the will-writing process is made more accessible, helping to ensure that people’s final wishes are met,” he said.

“If the legal sector succeeds in making it easier for people to write wills, while putting adequate safeguards in place for the public and minimising the opportunity for contested wills, this could be a critical step forward for legacy giving.

“Ultimately, the more people that write wills, the greater the potential for including charitable donations.”

The Law Commission consultation will run until 10 November.

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Charities could be missing out on £100m in legacy gifts, says report

An online survey of charity legacy officers and probate practitioners finds that some people are persuaded to leave gifts to charities in ways that aren’t legally binding

The charity sector could be missing out on as much as £100m a year because people are leaving legacy gifts in a non-legally binding form, a survey of legacy officers and lawyers has found.

The online survey of 130 charity legacy officers and 76 probate practitioners, carried out in March and April by the law firm Penningtons Manches, found that only 37 per cent of probate practitioners actively prompted clients to consider leaving gifts to charity in their wills, and 27 per cent “actively disliked” dealing with estates that included legacy donations.

The report based on the survey responses, Bridging the Gap? Improving Collaboration Between Probate Practitioners and Charities, says that 20 per cent of probate practitioners said they encouraged their clients to leave charitable gifts out of their wills and instead include them in separate letters of wishes to friends or family, which are not legally binding.

“On the face of it, this may feel like a relatively small percentage, but when this is extrapolated against the legacy income of the whole charity sector this could amount to as much £100m per year,” the report says.

“This is a very significant issue for the charity sector and needs to be addressed.”

One solution the report puts forward is better communication and understanding between probate lawyers and legacy officers – who, according to the survey, had radically different views of each other’s work.

The survey found that 82 per cent of legacy officers believed they provided a caring, compassionate and personalised approach to their work, but only 54 per cent of probate practitioners agreed and 26 per cent strongly disagreed. More than a third (34 per cent) of legacy officers were concerned that probate practitioners did not fully understand the tax exemptions associated with legacy giving.

More than a third (34 per cent) of legacy officers said they were dissatisfied with the frequency of updates provided by probate practitioners on the progress of legacy cases and, where updates were provided, a quarter were dissatisfied with the level of detail provided and the overall time taken to complete the administration of estates.

Among probate practitioners, on the other hand, less than half (46 per cent) of respondents were satisfied with the frequency at which charities checked in with them about progress and only 47 per cent were satisfied with the level of detail requested.

Alison Talbot, head of charities at Penningtons Manches, said the firm had “picked up on some tensions between legacy officers and probate practitioners” in its day-to-day work but had been “surprised by the strength of discontent” expressed in the survey.

“Even if the charity sector finds the views of the probate practitioners frustrating, it has to take notice of the concerns because these individuals are often the gatekeepers to future charity legacies,” she said.

Legacy officers also had concerns over their own organisation’s senior management understanding of legacies, with only 52 per cent of respondents agreeing that their senior managers grasped the issues and 39 per cent agreeing that trustees did.

Chris Millward, chief executive of the Institute of Legacy Management, said the issues the report highlighted were “sadly very familiar” to the ILM and its members.

He said he hoped the research would “act as a springboard for better understanding, improved communication and increased collaboration between charity legacy professionals and solicitors”.

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