Instructions were given to create a fixed interest trust for several beneficiaries. One intended beneficiary died before the settlor completed his instructions to the firm regarding the terms of the trust. The settlor still wants the deceased beneficiary to benefit under the trust as a beneficiary. Can this be done and is there any legal authority on this point?
Help please
Kedia Delahaye
Possibly, but it involves building a pyramid and it can be tricky to get the incantations right.
Otherwise no, but he can make gifts of varying kinds to the heirs of the deceased.
Andrew Goodman
Osborne Clarke LLP
I don’t see how someone can be a beneficiary of a trust when they have died.
Paul Davies
Clarke Willmott LLP
To give further details, the beneficiaries of the trust are the survivors of a particular incident. A particular body was mandated to identified the survivors of the incident who are to be the beneficiaries of the trust. By the time the investigation was completed some of the identified persons had died before the Drafting of the trust could be completed. As the matter is highly political the settlor wants the deceased identified survivors to still benefit from the trust.
Kedia Delahaye
Although a settlor may be able to make the estate of a deceased person the beneficiary of the settlement, this may be one of those occasions where the client would benefit from some robust advice.
There are many potential complications. This could leave funds tied up in an estate that is being administered, which may or may not be solvent, or by the time the distribution is made may have already been administered, not to mention potential tax complications. The residuary beneficiary of the estate, who would presumably benefit, may not be a family member.
If the settlor wants the family of the deceased to benefit, why not make the family members the beneficiaries of the settlement directly.
Barry Abrahamson
Abrahamson & Associates
The beneficiaries of the survivors are unknown at this time, so we have inserted a clause to speak to their PR being entitled to their share.
The settlor is adamant that the survivors are to be the beneficiary (matter is highly political) even the deceased ones.
Kedia Delahaye
In the circumstances, it seems to me the position would best be addressed by reference to Chancery counsel, who could give definitive advice. If the situation is as sensitive as now suggested, the settlor is likely to want to understand the justification for the structure proposed to validly enable the deceased survivors (their estates, dependents or heirs) to benefit.
Paul Saunders
Simple. Appoint them as beneficiaries (presumably by a list) and then include (bury if you wish) a further definition clause which includes the estate/PR’s/heirs of any named beneficiaries who died before or after the creation of the trust.
Andrew Goodman
Osborne Clarke LLP
Andrew Goodman’s suggestion would only work for a discretionary trust and this is to be a fixed trust. However, is there any reason why this couldn’t be a discretionary trust with a separate letter of wishes supplied by the settlor?
Lorna Sansom
Blandy & Blandy LLP