If a limited company is a beneficiary of a trust or Will, is there a requirement to search to see if the company is insolvent before making a distribution, as applies to individuals?
Simon Northcott
Hi Simon,
This is always a good question - my understanding is if the law is drafted as ‘individual’ it does not include corporations, if its drafted as ‘persons’ then it does.
The Trustee Act was recently changed from individual to persons - Section © https://www.legislation.gov.uk/ukpga/Geo5/15-16/19/section/37#section-37-1-c
Richard
PFEP
It is only necessary for the company to be in existence – it is still entitled to the legacy even if in insolvent liquidation – see RE: ARMS (Multiple Sclerosis Research) Ltd [1977] All E. R. 679 (Ch D).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
There is a big difference between bankruptcy and company liquidation. In a bankruptcy all the bankrupt’s property (with exceptions which are unlikely to be material) including choses in action vests in the trustee (or the OR if a decision is made not to appoint a trustee) so it is important to ensure that any payment is made to the right person - the trustee. Liquidation is different in that property remains vested in the company but the liquidator takes over running the company.
Clifford Payton
Alpha Court Chambers