I recommended that a client settled an investment bond into a trust, using a standard trust deed provided by the investment provider.
The investment provider made a mess of the commencement date of the bond and asked if we would print out a replacement front sheet for the trust deed, complete it with a later settlement date, scan it and email it to them. They would then replace the front sheets and rescan it, so the client and the co trustee are none the wiser and don’t need to be troubled to sign a fresh trust deed with a later date.
I have refused to do that and asked them if that was their usual way of correcting errors and they said, “yes!”
I’m not a lawyer. I would be interested to hear the views of my fellow STEP members who are lawyers on this type of practice.
Am I right to take a stand and insist they redraft the deed and get it resigned or am I (as suggested by the product provider) making a mountain out of a molehill?
I would suggest that if the only date on the document is that on the front sheet, but it is as you say a mess and presumably does not look very professional, I would suggest that the front sheet be reproduced with the original date, but certainly not with a later date since after all the trust has already been created on the original date.
From what you said in your original post, It would seem that the trust has already been set up on the date the settlor and the trustees, signed the document, so I cannot see how a later date can now be inserted in a new document. After all that is the date which must be included when registering for TRS as well as the date of the gift into the trust.
I’m afraid I can’t point you to any legislation or case law that would help on this particular issue, but I’m sure that others may be able to do so. To me it is just common sense that you can’t go along with what is being requested.
Sorry, only just seen this. I am a retired lawyer who used to work in house for various life offices. I must say my eyes got wider the more I read! I think you are absolutely right to be concerned by this.
The only person who should be executing the trust document is the settlor himself. Anything else brings the validity of the trust into serious question. This could obviously have serious ramifications, not least for IHT reasons.
I guess the life office doesn’t want to look bad in the eyes of the settlor but that might be a small price to pay if HMRC or disappointed beneficiaries got wind of it!
(Sometimes the life office is given powers to date the trust document but I very much doubt in these circumstances)
It’s a flexible reversionary trust deed provided as a ‘standard’ document by the life company.
We are being asked by the life company to print out a new front sheet, change the date and send it to the life company, who propose swopping the front sheets on the original document, which they propose rescanning to cover up the fact they used the investment bond after the original deed was executed.
To add to the problem, the life company also asked us to certify the altered document to state that we had NOT tampered with it!
I refused to comply.
The life company is refusing to correct the date of issue of the investment bond that was to be settled into the trust. In the meantime, the client has created PETs that would now fall before the date of settlement if the date were to be changed in the trust deed.
To compound the problem, in good faith, we registered the trust with the original date on the trust deed.
It’s a mess and we are stuck, simply because the life company advised us of a date of issue of the bond but then changed to a later date after the trust has been executed.
The 30 day cooling off period is about to end and we are pushing the life company to reissue the bond with the original issue date and compensate the client for any loss and to pay out fees for the additional work.
They have chosen to deal with it by way of a complaint which gives them at least 8 weeks to resolve, which takes it beyond the cooling off period.
The head of their trust team is a fellow STEP member and I have referred her to the STEP code of conduct that she and I both need to adhere to.
I’m inclined to the view that this is perhaps a matter that should be referred to the ombudsman who oversees the life company or, perhaps the PRA/FCA, mindful that you have been told this is their usual way of dealing with such matters.
Whilst there may be no question that the arrangement might facilitate tax avoidance, tampering with deeds in the manner suggested is, I believe, potentially a criminal act.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Their head of technical has acknowledged that the practice of altering documents is wrong and has said she will address the issue across the organisation. However, I’m more concerned about getting the right outcome for the client
You would need to take a careful look at the precise wording of the trust deed. It may be that, in it, the settlor purports to settle something which did not exist or did not belong to the settlor as at the date of the deed, or that the settlor intended to settle something different from what the trust deed said was being settled. In which case, it may be that nothing was actually settled in the first place.