Esson and Clements

Yours, mine, ours (and plenty for the solicitors)

When Dorothy Clements came into some money, she changed her will to leave that specific tranche of money to her grandchildren. These were her grandchildren by blood, not her husband's, and he was happy for that pile of loot to go to her grandchildren.

In changing her will, she was acting on an attitude that is simple and logical, and reflects the importance most people attach to blood ties: What's yours goes to your side of the family, what's mine goes to my side, and what's ours goes to both sides in equal shares. They had indeed made wills based on this principle.

When she came into the additional money from her mother, she changed her will by codicil. As her wishes regarding this money were so clear and simple, Dorothy worded the codicil herself:

"My Portman Building Society Account No. 72013068 is the residue of monies left to me by my mother Mrs Edith Firman. My husband Norman John Clements is in full agreement that should I predecease him, all monies in this account should be divided equally between my grandchildren...." [She then provided their names.]

It turned out to be not so clear and simple after all. She left the money to the grandchildren on the condition that she died first. Did she really mean the gift to be conditional? Or did she want them to inherit that money regardless of who died first?

Dorothy and Norman Clements did not have children together but each had three children from a previous marriage. They made mirror wills leaving everything in equal shares to one another - except the matrimonial home.

If he died first, she got it all, and if she died first, he got it all - except the matrimonial home.

What if they died in a car accident, one that killed both of them outright or was fatal to one of them a few days or weeks after the other?

This is a familiar scenario, and they covered it by including in their wills the customary clause stating that if they died within 28 days of each other, the residuary estate would go in equal shares to all of their children. For Mr and Mrs Clements, the residuary estate was everything minus the matrimonial home.

The Clements family home was not to be divided equally between children and step-children alike. Her share would go to her children if she died first, and his share would go to his children should he die first. Whatever happened, their biological children would inherit something.

This seemingly well-balanced arrangement was upset. In 2002, six years after making their wills, Dorothy's mother died, leaving Dorothy some money. Dorothy subsequently amended her will by codicil, which she drafted herself.

Clear as mud

Norman died on 3 July 2005, and a little more than a year later, Dorothy passed away, on 14 July 2006. Bastille Day! Fireworks followed.

With Dorothy outliving her husband, her codicil now produced a dilemma: if interpreted literally, the cash she apparently intended for her grandchildren would go into the general residuary pot, to be shared by children and stepchildren alike.

The linguistic puzzler ended up in the High Court, heard by a judge who addressed one basic question: what was the meaning of Dorothy's codicil?

To determine her meaning, her language was scrutinised word by word. For example, it was argued that her words "should I predecease him" should be understood as if she had written "even if I should predecease him". Two simple words - "even if" - alter the meaning considerably.

Another argument focused on the single simple word, "that" in the phrase "My husband Norman John Clements is in full agreement that should I predecease him...." Removing the word "that" also changes the meaning.

In the end, the judge examined a wide array of evidence and concluded that Dorothy intended the building society money for her grandchildren regardless of who died first.

Unanswered and unanswerable questions

The hearing considered only the meaning of Dorothy's codicil. I would have welcomed the opportunity to discover if she had considered other possibilities - even though they would have had no bearing on the court case.

Why did Dorothy write the codicil herself instead of consulting a solicitor? She probably thought that she could satisfactorily perform this seemingly clear and simple task; why pay a solicitor unnecessarily?

If she had drafted the clause and brought it to a solicitor for final drafting, almost certainly the solicitor would have identified the inadequacy of her phraseology - her failure to address the question, what if he died first? Yes, she would have paid the solicitor a fee, but solicitor fees for wills and codicils are fairly modest.

More importantly, in light of the costly court case, the solicitor's fee would have been a pittance compared with the costs of the High Court hearing. The estate would have save far more money than Dorothy would have spent on legal fees.

Dorothy's mother left her assets in equal shares to her two daughters, despite the fact that one of the daughters - Dorothy - intended to then pass on this money to her grandchildren (the great-grandchildren of Dorothy's mother). Did Dorothy's mother consider leaving the money directly to her great-grandchildren? "Generation-skipping" is recommended in some situations to save on inheritance tax. In this instance, it might have incidentally spared the family the High Court hearing.

Dorothy and Norman addressed the question of the matrimonial home. Did they consider putting the house in trust so that the surviving spouse could continue to live in it until their own death, whereupon it would then go to the children or grandchildren (according to the will). Trusts are complex and this kind of trust has its own wrinkles and complications, but it might have been a good option for them.

Did Dorothy consider giving some of the building society cash to her grandchildren while she was still alive in a manner likely to be tax-efficient?

Sound advice early on might have been beneficial for all of the members of this extended family.