A summary of key legal updates for the Private Client sector over the past week is as follows.    

Will drafting – IHT nil-rate band clauses

Royal Commonwealth Society for the Blind v Beasant & Anor (2) Benjamin Ho [2021] EWHC 2315 (Ch) relates to the construction of an inheritance tax nil-rate band (NRB) gift in a Will. The clause in question provided for a gift of the "Nil-Rate Sum" to one of the executors, with residue passing to 21 charities. The Will also contained legacies which exceeded in value the amount of the NRB. The clause did not make clear whether the NRB gift was to take effect subject to those legacies. The charities (led by the Royal Commonwealth Society for the Blind) argued that it should, meaning the NRB was reduced to nil; the executor argued that the NRB gift should take effect regardless. The High Court ruled in favour of the charities and gave a reminder of the law on construction of Wills: these should be construed in the same way as any other document with the ultimate aim of finding the true intentions of the testator, an approach confirmed by the Supreme Court in Marley v Rawlings [2014] UKSC 2. Nil-rate-band gift cancelled out by ambiguous will clause, finds EWHC | STEP

Testamentary capacity and burden of proof

Lonsdale v Teasdale and ors [2021] EWHC 2342 (Ch) is an appeal case involving testamentary capacity and the burden of proof. The appellant (the deceased's daughter) claimed that her father did not have testamentary capacity when he executed his last Will in 2017 (which excluded her from benefit). In the earlier probate trial, there was ample material before the District Judge to raise a serious doubt as to capacity, meaning that the burden should have shifted to the defendant to demonstrate capacity. Instead, the probate trial was conducted as if the burden fell on the claimant/ appellant. The High Court reversed this burden of proof and found that the defendant had failed to discharge it. The testator was in a vulnerable state when he made his 2017 Will, having recently lost his wife and son, and substantially failed a well-regarded screening test for cognitive impairment. Consequently, the 2017 Will was invalid and the Judge ordered that an earlier Will be proved. Lonsdale v Teasdale & Ors [2021] EWHC 2342 (Ch) (20 August 2021) (bailii.org)

IHT receipts and Covid-19

Inheritance tax ("IHT") receipts for April 2021 to July 2021 were £2.1 billion, £500million higher (a 33% increase) than the same period a year earlier. Commentators attribute the increase to the higher death rate during the pandemic together with the continued freeze on the IHT nil-rate band. However, HMRC have said it is too early to say whether the higher death rate and higher tax take are linked. EPrivateClient - article (paminsight.com); Experts react as nil rate freeze fuels 33% leap in IHT tax take (internationalinvestment.net)

Charities and responsible investing

On 18 August 2021, the Charity Commission published responses to its consultation on draft revised guidance for charity trustees on adopting a responsible approach to investing charity funds. However, the final guidance will not be published until the High Court has given judgment in the case of two charities seeking a declaration as to whether they can adopt a responsible investment policy. This is expected in 2022. Charity Commission publishes responses to responsible investment consultation | Practical Law (thomsonreuters.com)