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Unusual bequests

You may have read recently the story of Miss Joan Edwards from Bristol who signed a Will that left her estate to ‘whichever government is in office at the date of my death’. After Miss Edwards’ death in September 2012, her executors, the same law firm that she had instructed to draft her Will, paid over her estate, which totalled just over £500,000, to the Conservative party and the Liberal Democrat party in proportion to the number of Members of Parliament and ministers in each party.This ‘audacious’ reading of the Will attracted widespread criticism and the story attracted its own hashtag on twitter (#joan’shalfmillion) as members of the public joined in the debate and had their say on who should have benefited from Miss Edwards’ estate. In a climate of adverse publicity both the Conservative party and the Liberal Democrat party announced that they would pass the monies to the Treasury to reduce the national debt.The solicitors’ firm later released a statement to the effect that they had consulted Miss Edwards at the time of drafting the Will about the ‘unusual nature of her bequest’ and that it had been confirmed by Miss Edwards ‘that her estate was to be left to whichever political party formed the government at the date of her death.’ This begged the question, if this was the case, why didn’t her Will reflect this unambiguously?
Drafting a Will
This story serves as a valuable reminder for the legal profession about the importance of obtaining clear instructions from clients, establishing exactly how they wish their estate to be distributed and drafting a Will that reflects this. It also highlights the importance of considering the consequences of one’s decisions when drafting a Will. How you choose to distribute your estate on your death can have legal, practical and tax consequences that you should consider carefully prior to signing any testamentary deed.
Considering all of the consequences
In Miss Edwards’ case both potential results, payment to political parties or payment to a Government department, meant that her estate escaped inheritance tax because they are both ‘exempt beneficiaries’. However, had the confusion been between say, two national bodies, one of which did benefit from the inheritance tax exemption and the other did not, the drafting of Miss Edwards’ Will could have meant that her estate was subject to inheritance tax at the rate of 40% to the extent that it exceeded what is known as the ‘Nil Rate Band’. The Nil Rate Band is currently set at £325,000 and is the amount of a taxpayer’s estate charged at 0% for inheritance tax purposes.
If you wish to leave money to a political party, to the Treasury to reduce the nation’s debt or to another national body such as The National Museums of Scotland, your estate may benefit from an inheritance tax exemption.So, for example, a political party qualifies for exemption if at the last general election preceding the transfer either

at least two members of the party were elected to the House of Commons or
at least one member of the party was so elected and not less than 150,000 votes were given to candidates who were members of that party.

In addition, from 6 April 2012, if you leave 10% of your estate to a qualifying charity the inheritance tax due may be paid at a reduced rate of 36% instead of 40%.
In conclusion, even what can superficially appear to be a straight forward instruction for a Will can have unforeseen consequences, not least of which tax implications, and it is therefore recommended that everyone seek informed legal advice when drawing up their Will.
Nothing in this article should be relied on as tax advice. For further information or advice tailored to your circumstances please contact Shona Brown.