I have a mess of a situation, which I am trying to unravel and wondered if any other members could assist:
Mother (M) instructed solicitors in 2002 to put a property into a trust for her grandson (S). She entered into a declaration of trust stating that the 3 people named in the declaration were holding the property under the terms of the trust. The trust was drafted, but never signed. Property remained in M’s name. Does the trust exist from the point of a declaration of trust, or from drafting, or does it not exist at all?
In the meantime, Son (P.) instructed the same solicitors to place his property into a trust for his daughter, (D) thus equalising the situation between D and S, or it would have done if the trusts for D and S had been dealt with. P’s trust was drafted but never signed. P entered into a pre-nup with his second wife to be, in which it recited that his property was held in trust for D, thus it could not form part of any matrimonial assets in the event of a divorce. The marriage has now broken down, which casts doubt on the pre-nup in terms of P’s property.
When P realised recently that his property had not been placed on trust for D, he instructed a firm to deal with this. His wish was that he should only have the right to live in the property, he did not want to be able to access the underlying capital in any way, so there should have been no power of advancement. He has more than sufficient income and wished to ensure that D would utlimately receive the property ‘intact’ in terms of its value.
In the event, the firm has drafted a very broad trust, providing him with a life interest in income, with discretion as to capital, and any appointment out to another trust has to take the life interest with it. This is not what he wanted. There appears to be a clause which allows the trustees to ‘pay or apply’ the whole of the trust fund to the life tenant, so presumably that can be used to transfer the property back into his name. He can then set up a further trust, which provides ONLY a right to reside, with provision for a substitute property, thus ensuring that he has a home for the rest of his life.
M died in the mid 2000’s, leaving a share of her estate to P on a life interest. The solicitors who dealt with M’s estate did not transfer any of the property which made up that share to the trustees. The residue of her estate passes to P and his sibling, V. The property which M had instructed the solicitors to put in trust for S, forms part of a parcel of land, which is contained within the land which makes up the share of her estate in which P has a life interest. However, when M left the life interest to P, it was on the basis of her property being removed, as it should have been on trust for S. On that basis, does that property now form part of M’s residuary estate? If it does, then V is entitled to one half under the terms of the Will. All IHT has been paid, but we can still do a DOV in respect of V’s half, but of course, she has to agree to it.
I feel like I’m sitting in an exam, but this is what has happened (or not happened) in this situation. The solicitors who failed to carry out the clients’ instructions have stonewalled, failing to provide documentary evidence of pretty much anything.
The client doesn’t want to get involved in litigation, just wants to get it sorted out.
Any and all comments or advice would be much appreciated.
Wills and Trusts Planning Company Ltd