The Broekhuis case: A question of incapacity ? Recent case of disinheritance of family fuel for ethical debate

10 mei 2017

There are increasingly more wealthy older individuals, living longer and often being in a twilight zone of mental (dis)clarity. Fundraising institutions that acquire inheritances and legacies have to learn from the tragedy wherein the District Court Midden Nederland ruled on 8 March 2017. It concerns the case of the family of Mr. Broekhuis (wife and her daughters) against the Foundation Salvation Army and the National Association De Zonnebloem. The case has been widely reported in the press and on television.

The best portion of a good man's life: his little, nameless unremembered acts of kindness and love
William Wordsworth.

The Court considers the legal question of succession whether Mr Broekhuis was legally incompetent at the time of the drawing up of the last will, which would lead to invalidity of the will. In the Netherlands it is extremely difficult for family members to bring about nullity of a will, as proof thereto has to be provided that the testator was not able to oversee the consequences of testating and therefore willing to accept these consequences.

Notary does not issue a judgment
Our legal system relies to a great extent on the function of the notarial profession, which acts on the basis of a so-called 'Assessment of Legal Capacity'. This step-by-step plan leaves a lot of discretion to the civil-law notary, but requires him, if there is reason to doubt the legal capacity of a testator, to examine the state of mind more closely. Incidentally, it is widely assumed that the notary, even in case of persistent doubt, must pass a will. It is therefore not up to the civil-law notary to make a conclusive judgment about the capacities of the testator.

Sad epic
The facts in this procedure read as a sad epic about the late Arend Broekhuis [1], in which his philanthropic character fades into the background. I summarize concisely:
In the penultimate testament of Mr Broekhuis made in 2006, he divided his wealth roughly between his wife and stepdaughters (30%) and charity (70%). In the final testament made in 2012, the charities became heirs of his entire assets, with his wife receiving a usufruct on the house and a sum of money by way of legacy. The stepchildren each receive a legacy up to the maximum exempted amount of € 20,000. The estate has a value of approximately € 26 million. Given the age of Broekhuis' wife (she is 88 years old at the time of the estate's opening), the charities actually acquire the entire estate. As a result of this last will, no inheritance tax at all is to be paid on the inheritance of Mr Broekhuis.

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Legal competency
Following the notary's advice, testator's legal competence is investigated; the psychiatrist who sees him to in that regard declares him legally competent. Treating specialists, family members nor charities are consulted in this.

Dementia and tensions at home
In an earlier litigation in the same case, which concerned the submission of medical data by his psychiatrist, the Court Arnhem-Leeuwarden ruled that the family, based on data from the general practitioner, pulmonologist and GGZ substantiated that Mr Broekhuis suffered from dementia. The family for some years already noticed a significant change in character and repeatedly communicated their concern about this to doctors. This led to tensions in the home situation.

The remainder of the epic is a series of medical statements from treating specialists during life (who were obviously not asked to test for competence) and from professors who afterwards were asked to judge the legal competence of Mr Broekhuis at the time of testating, as well as explanations from third parties such as bridge friends and Arend Broekhuis' accountant. On behalf of the charities, much emphasis is placed on the fact that 'relationship problems' with his wife existed, while the family on the other hand emphasized the fact that Arend suffered from his medical defects including dementia and how all of them suffered from these defects.

Difficult relationship with the tax authorities
Furthermore, the facts show that Mr. Broekhuis had a difficult relationship with the tax authorities. He had officially expressed regret on not reporting assets abroad and his (obsessive) desire to avoid paying inheritance tax would have played a role in the modification of the will as well.

Appeal
In the meantime, the family's appeal at law has also been published, after the psychiatrist's examination has been ruled as inadequate by the Disciplinary Court for Healthcare Amsterdam; the psychiatrist has received a warning [2]. The opinion of Prof. dr. Scheltens, director of the Alzheimer Centre, who qualified Broekhuis posthumously as suffering from dementia, should, according to the family's appeal, weigh more heavily [3]. It is thus certain that the tug of war about 30% of the legacy of Arend Broekhuis will continue to command a great deal of attention.

Position of the charities
The fact that the family has tried to talk to the charities is well-established. It was their wish to keep the house for the family, resulting in more than 70% of the assets still remaining with the charities. When no positive response to this was received, the family decided to litigate for the nullification of the last will; if they would win this case, according to the penultimate will, 70% of the inheritance still goes to charity. The stake in this battle therefore is around € 7.8 million.
The facts show that during his lifetime Mr Broekhuis more often has made larger donations to both beneficiary charities. Mr Broekhuis therefore was no stranger to the Salvation Army and the Zonnebloem. It may therefore be deemed likely that Mr Broekhuis was on the list of 'prospects' for inheritances or legacies and that a relationship with Mr Broekhuis was maintained. The position that the charities have maintained after the opening of Mr. Broekhuis' estate is twofold:
a) The will was a big surprise for them; they were not involved in the updated will.
b) The will of the testator must be respected. It is not possible for the charity to deviate from the will; no testator would believe us anymore.

Incorrect position charities
In my view, this position is incorrect and undesirable, for various reasons.
First of all, it does not respect the interests of the testator (which are not necessarily the same as the text of the will). Charities must treat their benefactors with respect. The dignity of those benefactors must therefore be paramount. The love and affection of the testator within his family must be respected, that ultimately being 'the best portion of a good man's life'. Posthumous rooting in these relationships for the sake of one's own interests is contrary to the testator's interest. In principle, in a situation of potential conflict with the family, one should adopt a dignified basic attitude.

 It is generally known that people with dementia or Alzheimer's Disease have a limited sense of their own illness and tend to display a facade, making it not necessarily immediately clear to bystanders what is going on. For people with dementia, determining their will with regard to complex decisions such as disinheriting one's family in favour of charity is considerably more difficult than determining the will with regard to daily decisions, as specifically the ability to make the first type of decisions is affected.

In general, the issue of how the family of vulnerable elderly people that have passed away is treated will be of great importance for the perception of charities by the 'market' of high net worth individuals. By arguing the legal position that the existence of a 'relationship problem' is the explanation for the disinheritance of direct family, families in the future will become more cautious to bestow charities. People do not like to see a charity as the underlying reason of the wish of the testator to disinherit the family.

Also as an expert in the field of inheritance law, I believe that this position is unjustified. In fact, the charity hides behind the law and assumes its position as correct. This, however, is a misconception, since the antique principle that a will is not open to interpretation should be regarded as obsolete. In jurisprudence as well, legal incompetence is increasingly being assumed in cases where dementia plays a role. In practice, emotional conflicts about inheritances are best solved by settling them through an amicable solution, with respect for the testator.

Development of inheritance law
But the judge ruled in favour of the charities anyway? Yes, the District Court has allowed to the charities the benefit of the doubt, because the family could not provide the required proof of legal incompetence at the time of testing. The difference between being right and being proved right is in practice often determined by the distribution and appreciation of the burden of proof. In practice, District Courts and Courts do not always appreciate the evidence provided, where in this case the District Court did not allow the plaintiff the opportunity to provide further evidence.

There are, however, other routes than the 'complete demand for nullity' of the will. Where previously a will was not open to interpretation, judges increasingly apply general rules of 'reasonableness and fairness' in the spirit of article 4:46 of the Dutch Civil Code: "when interpreting a will, attention must be paid to the proportions that the will apparently wishes to arrange, and to the circumstances under which the will is made". This provision leaves room for more nuance.

Article 4:43 paragraph 2 of the Dutch Civil Code may also play a role, if the notary in the will has added the considerations that the testator had when amending the will to the 'considerations' of the will. Unfortunately, that still happens far too little. If a will is made based on an incorrect motive, it can only be annulled if the circumstance that was incorrectly assumed has been mentioned in the will itself.

Specifically when fiscal considerations play a dominant role, it is of great importance to interpret them in context - and to compare this context with the other considerations, such as the consequences of the de facto disinheritance of family members.

International developments
In an international context, more developments in the interpretation of wills can be seen, due to larger assets and more complex family relationships. For example, in the UK (in case of doubt) it is required that a testator has 'knowledge and approval' of the content and consequences of his will. If there are circumstances that give rise to doubt, the burden of proof is reversed; in that case, the party that 'relies' on the text of the will has to prove that the testator has indeed accepted the consequences of the will.

In the US, for example, 'insane delusion' and abuse of circumstances are considered to be an indication of absence of legal competence ('incapacity'). Mentally healthy people are not abused and do not rely on incorrect or 'biased' assumptions. In Dutch inheritance law, Section 4:43 paragraph 1 of the Dutch Civil Code stipulates that a will cannot be annulled on the grounds of abuse of circumstances. The reason for this is that the legislator attaches importance to legal certainty and wishes to limit procedures about wills. In other countries as well, it is traditionally difficult to prove abuse of circumstances; often proof is required which is compares to increased evidence in criminal cases. However, recent rulings by the Supreme Court in Australia considerably simplified the evidence required for those who wish to challenge a will based on undue influence [4].

In the future, more disputes about wills will be presented in court, which will create more room for 'tailoring', which does justice to the complex relationships covered by a will.

Lessons learned

It is precisely in the Anglo-Saxon countries that a lot of experience has already been gained with the acquisition of inheritances and ethical issues that related to this. The Institute of Fundraising [5]

indicates in its Code of Fundraising Practice that a fundraising institution must ask its beneficiaries to record in writing (in a letter to the institution and as an Annex to the will) what the considerations are to benefit the charity above the family. It is precisely these considerations that make it easier for family members to accept the will, or the other way around: if those considerations are not rational, why they should be rejected.

Ideally, therefore, charities communicated abundantly on these topics in their relationship with 'Major Donors' / prospects for legacies, because it cannot be considered to be in the interest of a testator that litigation about his legacy is necessary. Charities must be proactive in the relationship and also give such instructions to the notarial profession.

The notary as gatekeeper.
The notarial profession in the Netherlands also has a gatekeeper's role. If, for example, a testator would indicate that he, at the expense of his immediate family members, wishes to leave his full assets to a charity in order to save on inheritance tax, in my view the notary should be tasked to respond to this, whether or not to refer for an inheritance advice. The fiscal aspects should not be leading in determining an estate. In addition, the inheritance tax relating to an inheritance is borne by the heirs. Possible fears of fiscal criminal consequences (in the case of unregistered assets) are also mostly irrational because they do not inherit to heirs.

Solution: deviate from the will
The mere passing and settling of a will wherein the entire family is disinherited deserves extraordinary care to prevent disputes such as the Broekhuis case. There will be a long period of uncertainty about whether Mr Broekhuis could or could not see the consequences of his last will at the time of testing, whether his change in character was the cause or the consequence of the disagreement at home. In the grey area between the legal and medical domain, where the truth is difficult to find, humiliating civil conflicts are lurking.

Charities are advised to distance themselves from this and to come to a mediated solution with the family to end the uncertainty inherent to this situation. One gives themselves, as it were, a binding advice, which is recorded in a settlement agreement. A settlement agreement that is concluded in this fashion works between stakeholders as a transfer, meaning that it creates a new legal situation which must then be settled in a normal manner.

If an opened succession leads to uncertainty, in case of family disputes the interest of the testator will be served best by an amicable solution. Litigating about the shades of grey in his experience does not do justice to what the man has left behind and whether he had assessed these consequences, he must be considered to not have wanted them.

© Dr. Ineke A. Koele

[1] Rechtbank Midden-Nederland, 08-03-2017 / C/16/404001 / HL ZA 15-344, ECLI:NL:RBMNE:2017:1324 

[2] ECLI:NL:TGZRAMS:2017:27 uitspraak 31 maart 2017.

[3] http://www.ad.nl/binnenland/onterfde-weduwe-van-demente-multimiljonair-in-hoger-beroep~ab38a6cb/

[4] Sally Bruce, Clear Conscience, STEP Journal, March 2016.

[5] http://www.institute-of-fundraising.org.uk/code-of-fundraising-practice/

 

 

Broekhuis case
The respect, and therefore interest, of the testator is best served by an amicable solution
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