This article was first published in Spear's Magazine on
4 August 2016. To view the article please click here.
Wealthy families should not overlook the emotional and legal
complexities involved in the disposal of their valuables, write Ann
Stanyer and Andrew O'Keeffe.
It is not every day that you see a court grappling with one of
the rather unusual sections of the Law of Property Act 1925.
Section 188(1) was at the centre of a case to determine the
ultimate distribution of the late Sir Michael Butler's
extensive collection of valuable Ming and Qing dynasty vases, said
to be worth approximately £8 million. The simple point in
issue was whether two of Butler's children could say that their
entitlement to a quarter share each of the collection trumped the
defendants' contention that their half share meant that the
court could rule that the collection should be kept intact.
Ultimately, the court ruled that the collection should be divided
equally between the four siblings: a decision which will have come
at some considerable cost to the unsuccessful defendants.
This case is, therefore, a salutary reminder that taking
detailed legal advice on the disposal of your chattels is as
important as advice on the disposal of your real estate or
investments. Chattels have great emotional resonance for family
members and need to be given careful consideration by testators.
Simply hoping that siblings would put aside previous rivalries and
reach an amicable agreement is wishful thinking. It is often
the case that conflicts intensify once the parent/testator is no
longer alive to keep the peace and to arbitrate between
What can be done then to avoid costly litigation and a family
breakdown? It seems trite to say it but taking time to explain your
collections and other chattels with your trusted adviser is time
well spent. Don't assume that your adviser has a full
understanding of what you want to achieve. You may not know
yourself. What is clear is that Butler changed his mind over the
years as to what he wanted to do. Having a letter of wishes
signifying your objectives is fine if everyone is in agreement and
your executors are able to carry out those wishes. But remember a
letter of wishes, as the judge explained in the case, 'may have
some moral standing but they are of no legal
significance'. They can be set aside or partially carried
out by the executors. Advisers are at pains to explain this to
A far better way to deal with the division of chattels under
your will is to have a full discretionary trust will appointing
professional executors. Professional executors have the experience
over many of years of making decisions in the best interests of the
estate as a whole. They are independent of any family members and
not to be drawn into family disputes. The testator should have a
structure whereby items and collections are clearly identified, and
orders for selection set out. Similarly a testator should involve
known valuers and experts during their lifetime and these same
experts are used again for estate tax and distribution valuations
and advice. This provides consistency and assists with provenance,
ownership and storage issues.
One of the issues arising from the case was whether the various
ceramics acquired at different times and gifted over a number of
years and on death, constituted a collection which should not be
broken up. This issue causes problems for many wealthy families.
The capital gains tax (CGT) tax consequences can be considerable. A
collection is regarded as a set and as such a disposal of the whole
would attract £6000 worth of chattels exemption, whereas a
disposal of a separate item would not.
Finally, having clear written evidence as to any lifetime gifts
of chattels is essential in order to avoid arguments over
identification, valuation and ownership. One of themes of this case
was the conflicting understanding of the various siblings as to
what Butler had wanted to achieve, whether he wanted to the
collection to remain intact and if so, for how long. Advisors
are responsible for ensuring that HNW clients appreciate the
detailed paperwork and instructions required so that all parties
have a clear understanding and disputes can be avoided.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The well documented case of Heather Ilott and her attempt to overturn her Mother's will appears to have come to an end with the Supreme Court ruling that, whilst she may have be granted some money from her Mother's estate, it is a far smaller sum than the Court of Appeal awarded.
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