Husband died leaving a will containing a NRB D/T residue to surviving spouse absolutely.
this is a second marriage and deceased and surviving spouse have a child each from first marriage.
Class of Beneficiaries of NRB Trust include Wife and Issue.
However, testator ( now deceased) prepared a revised letter of wishes some years after creating will stating his wish for £50k to go to son of spouse ( not his issue) irrespective of tax considerations that may prevail on first death.
No admin provisions in will to speak of that deal with the scenario and I cannot see there are statutory powers allowing the trustees to alter the class of beneficiaries.
Options: A DOV to amend the admin provisions of the will to enable the trustees to extend the powers to include ability to appoint new beneficiaries to the class? OR…
Unless the will provides for the class to be extended, or the class is
closed and all members of it are aged 18 at least, the widow’s son
cannot benefit from the trust.
It might be possible to comply with the spirit of the deceased’s wishes
by the widow making a gift of £50,000 and, once made, apply to the
trustees to effectively restore her finances. This would avoid the fraud
on a power that would likely arise on a distribution to her to enable
her to make the gift.
Hi Simon the class is closed and thus no DOV can be used to extend the class of beneficiaries. However, can a DOV be used to add powers for Trustees to add to the class of discretionary beneficiaries?
Dan, if the class of Discretionary Beneficiaries is closed (ie there can be no further potential beneficiaries born to the class) and all are adults then they can vary the original legacy to the NRBD/T to enable the stepson to receive the £50K and the trustees the balance of the original legacy. Alternatively, they could use a DoV to give the trustees the dispositive power to add to the class of beneficiaries or they could add the stepson to the class themselves. If there are minor beneficiaries within the class or there is the potential for further beneficiaries to be born to add to the class then no DoV is possible. Instead, Paul Saunders’; suggestion seems the best course to achieve the desired result.
A Deed of Variation is a gift/change of disposition. A change of administrative powers alone is not a gift/change of disposition and I do not believe hmrc would accept that s142 worked in that situation.
In the absence of authority, whether within the trust instrument, or
from the beneficiaries (applying Saunders v. Vaultier) trustees cannot
change the administrative provisions on their own. They would need to
apply to court for an order in Dr the Variation of Trusts Act 1958.
This would apply regardless of whether or not HMRC might be minded to
accept the change.
If variation of residue by the surviving spouse (with a totally unconnected request of the trustees to pay her £50K that is subsequently satisfied) is not possible, is there any mileage in looking at the will file and seeing whether there is any opportunity to claim a clerical error capable of rectification? If an explanatory letter might be opaque in its description of the classes of beneficiaries, or other correspondence that would lend weight to this, perhaps it is worth considering?