InsightsInsight - Agriculture and Rural, Wills Trusts and Probate Disputes - POSTED: February 16 2023
When are promises to leave a legacy binding?
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“Promises are made to be broken”, or so the saying goes. But did you know that a promise to leave land to someone may be legally enforceable – even if this isn’t written in your Will?
In the Christmas 2020 issue, I wrote about the unfortunate case of Tump Farm and the Guest family who farmed it. Since then, the case has been appealed to the Supreme Court which gave its judgment in October 2022.
David Guest and his wife Josephine had acquired the farm in the 1960s. Their two sons, Andrew and Ross, had grown up on it, worked on it and raised their families on it in the expectation – borne of assurances made by David and by Josephine – that they would inherit the farm equally on their parents’ deaths.
Both David and Josephine made Wills to this effect. But, after a major falling out, the parents changed their Wills so that Andrew would not get his share. When Andrew learnt of this, he brought a claim against his parents to compensate him for his lost share.
Promises, promises: the legal implications
If you make a promise or give an assurance about an inheritance to someone, which they then reasonably rely on, to their detriment, that person may have a claim against you (or more commonly your estate) if the promise is broken.
Such a claim, known as a ‘proprietary estoppel’ or ‘promissory estoppel’, is particularly common in farming families. It has been called ‘a little known piece of land law’ which allow individuals to assert and establish an interest in land without the usual formalities, and the court has wide powers to decide what the appropriate remedy should be.
In Andrew’s case, the lower court had been satisfied that his hard work on the farm, for only a basic wage over 30 years, was sufficient detriment on which to found a claim, and that he had a reasonable expectation he would inherit half the farm.
Andrew succeeded. Unusually, his claim was brought before David and Josephine’s deaths, but the court none the less ordered they pay their son a lump sum of £1.3 million (calculated as 50% of the farming business value, and 40% of the land value). The award was to reflect that which Andrew had lost out on by the broken promise.
David and Josephine were still living on, and farming, Tump Farm. They would have had to sell it in order to pay Andrew the £1.3 million, and the court’s decision was widely regarded as being unfair on them. Further, Andrew would be receiving his ‘inheritance’ early – before David or Josephine had even died. They appealed (unsuccessfully) to the Court of Appeal, and then to the highest court – the Supreme Court.
The Supreme Court: a fairer ruling?
The Supreme Court accepted that holding a defendant to a promise may not always be fair or possible. It suggested that, depending on the facts, it may be better for the court to put a claimant back into the position they would have been in if they had not relied on the promise in the first place, rather than compensating them for the full value of the promise.
Unfortunately for David and Josephine, however, the Supreme court largely followed the decisions made in the lower courts by compensating Andrew for the value of the promise – although it did concede there should be discount for Andrew’s early receipt of it. The court also proposed an alternative remedy and gave David and Josephine the choice of putting the farm into trust for Andrew, but retaining a life interest for themselves instead of paying him the lump sum (to allow them to continue living on the farm and farming it).
The Supreme Court’s decision was perhaps a slightly fairer result, although the case does still serve as a salutary reminder about the possible consequences of making and breaking promises vis a vis an inheritance. It is always sensible to seek professional estate planning advice early on.
If you need help putting in place the plans for the future that you envisage for you and your family, Brachers experienced Contested Trust & Probate team can help.
This article was first published in the February 2023 edition of South East Farmer.
This content is correct at time of publication
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