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Legal News | 21.05.19

Your Wealth, Your Decision…or is it?

Testamentary freedom is the concept that you can, within your Will, leave your wealth to whomever you wish – whether by outright provision or by placing assets into a trust.

The recent case of Cowan v Foreman reaffirmed the English Court’s commitment to upholding testamentary freedom wherever possible, by rejecting Mrs Cowan’s application to receive her inheritance in the form of outright legacies instead of through the trusts set up by Mr Cowan’s Will.

Under the terms of Mr Cowan’s Will, he made Mrs Cowan a beneficiary of two trusts. Since Mr Cowan’s death, the trustees have been supporting his widow with large monthly payments. It is however reported that Mrs Cowan was uncomfortable with the arrangements, feeling that she was “at the mercy of the trustees” who could cut her adrift with no access to money at all.

Mrs Cowan therefore applied to the High Court to vary the distribution of her late husband’s estate. Ruling against her, the judge stated that “there is absolutely nothing in the evidence to suggest that the trustees would blatantly defy the deceased’s wishes” and “it must be possible for the testator to provide for his widow by a generous trust arrangement such as this, without the fear that it will be interfered with at huge expense in proceedings under the 1975 Act.”

As highlighted in the Cowan case, as long as trustees act in a reasonable manner and in accordance with your wishes, the Court has, thus far, found little reason to overturn such a trust arrangement. It should however be noted that Mrs Cowan has indicated her intention to appeal the judgment so while, for now, the Courts appear to be upholding this concept, it remains to be seen whether Mrs Cowan will persuade them to alter the means of her inheritance.

While Mr Cowan’s choice as to how to distribute his estate has, for the time being, been upheld by the Courts – most likely because provision was made for Mrs Cowan, even if it wasn’t in her preferred form – it is essential to be aware of the 1975 Act referred to within the Cowan case and those persons who might expect to inherit from your estate and the rights of those persons if those expectations aren’t met.

If, for example, you chose not to include your spouse or someone else who might expect you to make “reasonable financial provision” for them under the terms of your Will, then that person might choose to bring a claim under the 1975 Act. In this situation, if the Court felt that such provision should have been made, they could choose to ignore the terms of your Will and seek to alter the distribution of your estate to provide this lacking “reasonable financial provision”.

So while the concept of testamentary freedom does remain, there are certainly some potential pitfalls to be aware of when making a Will and planning for the future.

To ensure that you are fully advised when making your Will, please either get in touch with your usual contact or contact us on 01380 733 399 or via email at wealth@wansbroughs.com.


Posted By Our Wills, Tax, Trusts & Probate Team