Settling up is hard to do
In contentious probate claims, as in foreign affairs, ending the war can be easier than concluding the peace. Take a fairly standard dispute, where Party A wishes to admit a will to probate while Party B wishes to admit an earlier will on the basis that the later will is invalid for, say, lack of capacity and lack of knowledge and approval. The parties may reach an agreement to move forward on the basis of one of the wills, or they may (along with the other beneficiaries) agree that the deceased’s testamentary wishes be varied to reflect the terms of a compromise.
Unlike other disputes it is not open to the parties simply to enter into a consent order reflecting their agreement and move on. The Court rightly exercises a sharp-eyed jurisdiction when it comes to contentious probate matters, and so there are three defined ways in which a settlement between the parties can be perfected. None of these are straightforward.
Solemn Form Grant
The first means of settlement is for the parties, notwithstanding the fact that they have reached an agreement, to proceed with a trial on written evidence. This results in a bulletproof grant of probate in solemn form, meaning that it cannot be challenged later. This can be a good option when there are minor or unborn beneficiaries who might bring a claim in the future, but in most circumstances the time and expense required for a full trial will be disproportionate and excessive. It might be good for the lawyers, but not usually for the feuding beneficiaries.
Consent of All Beneficiaries
The second route open to the parties is an application under section 49 of the Administration of Justice Act 1985. This allows the Court to pronounce (in common form) for or against the validity of one or more wills on the basis that the consent of all the relevant beneficiaries has been obtained. This may sound straightforward, but the practicalities are not. The reason for this is that the statute specifies that “beneficiaries” in this context means “a person who under any such Will is beneficially interested in the deceased’s estate” (as well as those potentially entitled under the intestacy rules if relevant).
As such, if this option is taken, the consent of all beneficiaries including legatees, needs to be obtained before the Court will approve the settlement. This is the case even if the settlement does not affect the entitlements of such beneficiaries. Obviously, depending on the circumstances, the costs and time involved in obtaining the required consents can be unattractive.
Discontinuance or Dismissal
The final option open to reconciling litigants is an application under Part 57.11 of the Civil Procedure Rules (“CPR”). The usual method of discontinuance under CPR 38 is not available in contentious probate actions however the parties can bring their claims to an end with the permission of the Court.
On the face of it, this would seem only to allow all proceedings to be ceased and for probate to be granted in common form in relation to the last will of the deceased. In practice, the Chancery Division may not insist on a dismissal or discontinuance but can allow the claim to be stayed under a Tomlin Order, the schedule to which can set out variations to the will which give effect to a compromise reached between the parties. In any event the Court will need to be satisfied that there is no substantive dispute between the parties regarding the validity of the will to be admitted to probate. If the Court does not accept this, the parties could find themselves having to go through the trial on written evidence process.
If any such variations are agreed within 2 years of death, there may be tax advantages to the parties entering into a formal variation rather than simply agreeing that the estate be distributed otherwise than in accordance with the will. This needs to be thought about carefully as if there is extraneous consideration given in exchange for the variation then the tax advantages may not apply. Equally, if there is no deed of variation the parties need to turn their minds to the potential tax consequences of (re)distributing the estate otherwise than in accordance with the will. A party giving up entitlements may be making transfers with inheritance tax and/or capital gains tax consequences. These consequences should be thought through and dealt with openly and fairly between the parties to give effect to any settlement.
Leaving the above considerations aside, an application under CPR 57.11 will often be the simplest way to settle a contentious probate action, but there are no simple options and the circumstances of the case will dictate the correct path.