Clients should make clear & specific wills after ‘surprise twist’ lawyer's 'file note' backs sale of elderly lady's house for care home expenses

The poor wording of wills, often the blame of solicitors can lead to financial disasters affecting families & beneficiaries later on. CONSUMERS across Scotland should heed warnings over the correct preparation & wording of their own will & final testament, paying particular attention to any involvement by solicitors in their residual estate after a Glasgow Sheriff heavily criticised the lack of full clear notes & instructions given, and retention of files by an unnamed law firm, after ruling on a case involving an application under the terms of the Adults with Incapacity (Scotland) Act 2000 for the appointment of a lay individual to be welfare Guardian to a lady aged 87 who owned her own home but is now living in a care home, and for a solicitor to be her financial Guardian.

The case, which for the avoidance of doubt, has not alleged any wrongdoing on the part of the unnamed law firm or beneficiaries, involved a wrangle over the status of the elderly lady’s house, which she had bequeathed in her will to a named beneficiary, although the ‘requirements’ to pay for care costs meant her house will have to be sold to fund the ongoing cost of care rather than pass on as per the apparent instructions of her will.

The unnamed elderly lady had made a will in 2003, when she still had capacity, in which she made a specific bequest directing her executors that in the event of her death, they should convey and make over to a named individual the house in which she then resided (or any other house which she might then own and occupy as her principal residence). She still owns the house in which she resided in 2003, but has not now occupied it since January 2010, and is not capable of returning there. She had also directed that the residue of her estate should be divided equally between two charitable organisations.

When the application was received at Glasgow Sheriff Court, it disclosed the provision in the Will and the need to sell the house, but the applicants did not seek to have the Application intimated to the individual named in the bequest (the beneficiary). The Sheriff stated he thought it was appropriate that it should be so intimated and ordered that it be done as the house is valued at £140,000, and the potential loss of that bequest is therefore substantial.

The solicitors suggested that since the house represented about 70% of the value of the unnamed adult's estate, the court should direct that a codicil be executed giving the beneficiary 70% of the estate remaining at death instead of the house itself, however Sheriff Baird doubted that the court had such a power under the Adults with Incapacity Act.

At the date of the Hearing, according to the Sheriff's opinion, there was produced a letter from the prospective beneficiary, indicating that it was understood that the need to make proper provision for the continuing care was paramount, however the Sheriff went onto say “it seemed unclear to me whether the individual concerned appreciated the full implications of what was proposed. Sheriff Baird stated in his opinion he was shown the letter which had been sent to that person by the applicants' solicitors”. Sheriff Baird then went onto criticise the terms of the letter, saying “it did not seem to me that it spelled out the potential consequences as clearly as it might have”.

Sheriff Baird’s opinion, published on the Scottish Courts website then went onto report the “surprising twist” of a file note being found by the solicitors acting for the lady now resident in the care home, stating : “The case then took a slightly surprising twist. The applicants' solicitors, who had acted for the Adult when the Will was executed in 2003, looked out their file in connection therewith, and found a file note of the interview which the partner acting had had with the Adult. That note, written in the manuscript of the partner, but taken during interview with the client and clearly reflecting the intention of the Adult, states the identity of the potential beneficiary and then says "House only, not money if house sold". In fact, in the original manuscript version, the word "not" is underlined twice.”

While the Sheriff went on to say “All of the individuals involved here are thoroughly responsible professional persons, all acting from honourable motives”, the effect of the content of the apparently forgotten then found file note “is that there now exists clear and unequivocal evidence that the Adult did not intend to distribute her estate by leaving the potential beneficiary the equivalent of 70% of her estate; rather, she intended that person to inherit her house on her death, and nothing at all if it transpired that she did not own a house at the time of her death.” thus ensuring there was no question of the court intervening and authorising any alteration to be made to the terms of the Will.

Sheriff Baird concluded solicitors should learn lessons from this case in terms of the amount of documents & information engathered during the preparation of clients wills. He said : “There is a lesson to be learned. It is that practitioners who are instructed by a client to prepare a Will ought to make full and clear notes of the instructions given, perhaps ought to canvass alternative destinations in the event of subsequent changes in circumstances, and ought to give serious consideration to retaining all such files for future reference.”

Well, although again I would stress there is no evidence or claim of any wrongdoing in the case heard by Sheriff Baird at Glasgow Sheriff Court, from my personal experience of having been a victim of an executor, an accountant trying to insert apparently made up wishes or codicils into one of my own parent’s wills, anyone who has made a will or is thinking of making one should ensure the wording of their will is strict and to the letter of their precise instructions, while of course, ensuring you never making the mistake of appointing an untrustworthy solicitor, or an untrustworthy accountant as your executor, as you will be preparing the ground for another successful rip-off where your family and beneficiaries end up with not one penny, and in fact possibly being asked to contribute to paying the extravagant fees of the lawyer & executor, along with unjustifiable bank interest charges.

If you want to find out more about how lawyers and executors mishandle wills, you can read some of my previous reports on this subject, here : Wills - How your final wishes can turn into a final nightmare and of course, not forgetting if you want to read how Borders solicitor Andrew ‘Drew’ Penman & Borders accountant Norman Howitt ripped off my father’s will, you can read more about that HERE, & HERE. Just make sure what these people and their professions did to my family, and the hounding they gave us for trying to put it right, does not happen to you.

Perhaps I should also add that under the much less than perfect rip-off financial system we live in, clients should also remember they may well end up having to sell their own bones & DNA to pay for any required care services, before thinking of their families or beneficiaries. You can thank the various bankers, lawyers, politicians and various other wasters of public funds who remain in power for that one.

Sheriff JA Baird’s opinion from the Scottish Courts Service website is reprinted below, in full. Perhaps in terms of the circumstances of Sheriff Baird’s comments on the ‘surprising twist’ find of an apparently forgotten file note, the name of the law firm should have been published in the court opinion, in the public interest.

Application in Respect of BH

Sheriff J A Baird, Glasgow Sheriff Court 23 December 2010.

Nature of the Application

1. This was an application under the terms of the Adults with Incapacity (Scotland) Act 2000 for the appointment of a lay individual to be welfare Guardian to a lady aged 87, and for a solicitor to be her financial Guardian. The adult is an adult with incapacity as defined by the Act, and is no longer capable of living in the community. She is now resident in a Care Home. She owned her own house, but the need to pay for care costs is such that her house will require to be sold in order to fund the ongoing cost of care.

The Effect of the Sale on an Existing Prospective Beneficiary

2. The adult had made a will in 2003, when she still had capacity, in which she made a specific bequest directing her executors that in the event of her death, they should convey and make over to a named individual the house in which she then resided (or any other house which she might then own and occupy as her principal residence). She still owns the house in which she resided in 2003, but has not now occupied it since January 2010, and is not capable of returning there. She directed that the residue of her estate should be divided equally between two charitable organisations.

3. In two earlier cases, (T Applicant 2005 SLT (Sh Ct) 97 and JG 2009 SLT (Sh Ct) 122) I expressed views about the power of the Court to authorise the alteration of a Will, either by adding a codicil or by re-writing it completely, of an adult who had now lost capacity to make any such alteration. Such action may be required by the effect of intervening circumstances or the need to correct obvious errors. I stressed that before doing so, the Court would need to have clear and unequivocal evidence of the intention of the testator.

4. The effect of the sale of the house in the present case would be to defeat the specific bequest made by the Adult in her Will. Of course, that is a step she could always have taken herself, assuming she retained the capacity to do so, if, for example, she had decided to sell her house and move into care, and so the bequest would only ever have had effect if she had still been living in her own house at the date of her death.

5. When the application was received at this court, it disclosed the provision in the Will and the need to sell the house, but the applicants did not seek to have the Application intimated to the individual named in the bequest. I thought it was appropriate that it should be so intimated and ordered that it be done. The house is valued at £140,000, and the potential loss of that bequest is therefore substantial.

6. At the date of the Hearing, there was produced a letter from the prospective beneficiary, indicating that it was understood that the need to make proper provision for the continuing care was paramount, but it seemed unclear to me whether the individual concerned appreciated the full implications of what was proposed. I was shown the letter which had been sent to that person by the applicants' solicitors, and, with respect, it did not seem to me that it spelled out the potential consequences as clearly as it might have.

7. Accordingly, I continued the Hearing for another letter to be sent to that individual, and for that person to be advised to seek independent legal advice. That was done.

8. The individual did seek independent legal advice and the outcome was a passage of letters between the applicants' solicitors and the solicitors instructed by the potential beneficiary, which letters I was subsequently shown.

9. The initial response by solicitors on behalf of the potential beneficiary was that the application, including the grant of a power to sell the house which was the subject of the bequest, was not opposed, recognising again the need for the adult's future care costs to be fully met.

10. However, the representation was then made that it was clear that what the Adult had intended to do was leave what was effectively the bulk of her estate to the proposed beneficiary. The house represented approximately 70% of the value of the estate, and it was represented that what should happen was that after the house was sold, a codicil to the Will should be executed, altering the terms of the residue clause so that instead of leaving all the residue (which would by then of course include the free proceeds of sale) equally between the two charities, it should instead provide for 70% of whatever remained of the estate at the death of the Adult to pass to their client, the individual who had originally been named in the specific bequest of the house, with the remaining 30% being divided between the two charities.

11. That raised two interesting questions; (1) whether it was clear that that had been the intention of the testator, and (2) more fundamentally, whether the court had any power to do what was proposed, given that the solicitors suggested that the court could "instruct" (which was the word used), the Applicants' solicitors to execute such a codicil, even assuming that it did accurately reflect the testator's wishes. They expressed a hope that the applicant for financial guardianship would agree to proceeding in such a manner.

The Powers of the Court

12. This raises a question as to whether the Court, assuming it decided that some form of alteration to the Will by way of codicil was justified in the circumstances, has the power ex proprio motu to instruct the taking of any such step. In the absence of any detailed argument on the subject, I have to say that I do not regard the court as having any such inherent power.

13. All of the principal sections which give the court powers in the situations provided for by the Act all refer to the need for there to be an application made by a relevant party. Sections 53 (Intervention Orders) and 57 (Guardianship Orders) both begin by referring to the need for an application to be brought by a person claiming a relevant interest. Section 20, which gives the Court powers in relation to the operation of a continuing or welfare power of attorney, similarly begins by referring to the need for there to be an application by a relevant party. I do not see in any of these sections any power given to the Court ex proprio motu which would allow it to order that the Will in question should be altered in the way suggested.

14. If that is correct, then it would mean that the particular matter which was raised by the solicitors for the potential beneficiary could not be ordered to be done ex proprio motu. It would have required an application to that effect by a relevant party, and that means a formal application in the appropriate court process by a person who was a relevant party to it. There was no such application here, and so, even if I had been minded to "direct" the adding of a codicil as desiderated, I had no power, in terms of the specific sections mentioned, to do so.

15. That left open the question of whether the court has the power to do what was suggested in terms of section 3 of the Act. As I have said before in other cases, I do not read that section as allowing the court carte blanche.

16. Again, without having heard argument on the point, I have to say that my inclination is that the provisions of section 3 would not have entitled me to "instruct" the making of a codicil as suggested here. Section 3(1) says that in an application or any other proceedings under the Act (and this was an application under the Act) the sheriff may "make such consequential or ancillary order, provision or direction as he considers appropriate". To my mind, the adjectives "consequential" and "ancillary" must be taken to qualify the nouns "provision" and "direction" in the same way as they obviously qualify the noun "order". Assuming that to be correct, I do not see how the proposed codicil altering the residue clause could be considered to be "consequential" or "ancillary".

17. There is of course a range of specific powers then given to the court by section 3(2), one of which, section 3(2)(c), allows the court to make such further inquiry or call for such further information as appears appropriate and was the one which I used in continuing the case for further information about the position to be adopted by the potential beneficiary. I do not however read any of those further specific powers as allowing me to "instruct" the making of a codicil as suggested here.

Evidence of the Intention of the Testator

18. That left the other question I mentioned above. If there had been clear and unequivocal evidence that the Adult had truly intended the potential beneficiary to benefit in the manner suggested by the solicitors in correspondence, and if the applicants had consented to it, it would still have been possible to authorise the making of a codicil to the effect suggested. As I have said, it was now being represented that the Adult had truly intended to make provision in favour of the proposed beneficiary of a substantial percentage of her estate, albeit it was explicitly accepted that the care costs must now take precedence with the effect of diminishing the estate.

19. The case then took a slightly surprising twist. The applicants' solicitors, who had acted for the Adult when the Will was executed in 2003, looked out their file in connection therewith, and found a file note of the interview which the partner acting had had with the Adult. That note, written in the manuscript of the partner, but taken during interview with the client and clearly reflecting the intention of the Adult, states the identity of the potential beneficiary and then says "House only, not money if house sold". In fact, in the original manuscript version, the word "not" is underlined twice.

20. They sent a copy of that to the solicitors for the proposed beneficiary, who after further consultation with their client, confirmed that their client had always expressed a desire to respect the Adult's wishes, and accepted that these had been made crystal clear in the terms recorded in the file note. The proposal to alter the residue clause was accordingly abandoned. They did point out, with some considerable force, that it would have been helpful if that material had been produced in the first place.

21. I should add that all of the individuals involved here are thoroughly responsible professional persons, all acting from honourable motives.

22. The effect of the content of the file note of course is that there now exists clear and unequivocal evidence that the Adult did not intend to distribute her estate by leaving the potential beneficiary the equivalent of 70% of her estate; rather, she intended that person to inherit her house on her death, and nothing at all if it transpired that she did not own a house at the time of her death. There is therefore no question of authorising any alteration to be made to the terms of the Will.

The Practical Effect

23. There is a lesson to be learned. It is that practitioners who are instructed by a client to prepare a Will ought to make full and clear notes of the instructions given, perhaps ought to canvass alternative destinations in the event of subsequent changes in circumstances, and ought to give serious consideration to retaining all such files for future reference.