Property into lifetime trust - paperwork missing

(Kirsty) #1

I have some new clients who have made wills and entered into an arrangement with a well known/notorious asset planning company. They have set up a lifetime trust for their property and made wills alongside. The problem being the company has now gone into administration. They have no original documents, only scanned copies. They would like to disregard the trust entirely (nothing has been effected at HMLR) and make new wills with us, with a simple life interest in half the property for spouse. My question really is can they disregard the trust that was created, as the original deed is gone, or what would be the best way to approach it?

Kirsty Cartwright
St Helens Law

(andrew.goodman) #2

I would not be concerned about the lack of original deeds if you have copies.

But I would not ignore the trust. If they are the trustees, they may well be able to advance the property back to themselves by an advance, appointment or (with a lot of these trusts being sold) revocation. They could do that in a single page.

If they are not the trustees and there is a TR1 in a file transferring legal title to the company or others, I would first see if they have power to appoint/remove trustees and take it from there.

Andrew Goodman
Osborne Clarke LLP

(Paul Saunders) #3

The fact is that the trust exists, and cannot just be ignored because it is “convenient” to do so.

The fact that the original paperwork is missing does not invalidate the trust. It is fortunate that copies are available - consideration might be given to the clients making a statutory declaration in respect of the missing documents, confirming that the copies are “true” copies of the originals.

If the copy trust deed(s) include powers to wind up the trust and distribute the property to the settlors, then that route could be adopted, although there will be tax considerations. An alternative is to apply to court for the trust to be set aside if it is considered to have been “mis-sold” i.e. entered into under a mistake. Whilst liabilities would arise, payable either out of the trust or by the clients, it may be possible to claim reimbursement against the company if it carried PII.

Are your clients the trustees, or is the trustee the company now in administration or an associate of it?

If the clients are the trustees, they can control what happens, going forward. If not, and the trustees are unwilling, or unable, to cooperate, it may also be necessary to apply to court for the appointment of replacement trustees.

In any event, sounds like the clients need to make new wills ASAP giving a life interest in a half share of such property as they might own, rather than specifying a particular property.

Paul Saunders

(Graeme Lindop) #4

I suspect the answer to this question will depend on who the trustees of the lifetime trust are and the nature of the trust document. If your clients are the trustees of the trust, they could have established it by declaring they hold the legal title to the property on the trusts set out in the trust document. If so, there would be no need to make any changes at the Land Registry other than, possibly, registering a restriction against the title. I do not see the lack of the actual document as a problem as there is evidence of its contents in the form of the scanned copy.

If there is no declaration of trust over the property, then the clients will still have the option of whether or not to add the property to the trust – it will remain their decision and they cannot be forced to make the addition.

Graeme Lindop

Coles Miller Solicitors LLP

(Kirsty) #5

Thank you for replies! I understand the clients are the trustees but I have not actually had sight of any of the documents yet! I will hopefully have them this week and will have a bit more information.

Kirsty Cartwright
St Helens Law