Criminal activity by occupants of trust property

We act as trustees of a small property, which the deceased instructed was to be held in trust until her youngest child is 25. She is currently 14 and lives with her father in his property. The house is occupied by the deceased’s two adult sons who have a history of drug related problems, and one of them has been in prison. Insuring the property proved difficult as neither son would disclose his criminal history therefore expensive, specialist insurers have had to be used.

We have recently learned “on the grapevine” that the house was raided last year and that the police made major finds, but of what we do not know. We assume it was drugs.

The deceased anticipated this and there is a clause in her Will which prohibited any of her children who engaged in criminal activity from living in the house. The police will not tell us anything without the consent of the sons, or a “binding legal reason”. We believe the property insurance may lapse if there has been criminal activity, but if the police will not tell us we cannot be sure.

We would like to evict the sons and bring the property up to a standard where we can rent it and obtain a good income for the trust, which will benefit all of the beneficiaries.

Does anyone have experience of this, or even a few pointers? Many thanks.

Elainne Lawrie
PDA Law Solicitors Limited

You don’t say who are the beneficiaries of the will trust, and in particular whether the children’s father is entitled to occupy under an express right to occupy. But if the beneficiaries are the
three children then secs 12 and particularly 13 TOLATA are relevant. The trustees can exclude the offending beneficiaries from occupation and take proceedings for eviction.

Your real problem seems to be one of evidence. I assume that the father of the youngest child can’t or won’t cooperate. Would he maintain that position if he knew his own occupation was at risk?
He is likely to have at least condoned the illegal activity. Have you been able to make contact with any neighbours? Even if they can’t speak as to drug use they may have complaints about noise or other forms of disorder. A good local enquiry agent may be
able to find out useful information.

Once proceedings have started I would expect that the police would show more cooperation once served with a witness summons, but you probably don’t yet have enough evidence to make a sustainable
decision as trustees and issuing court action speculatively is definitely not encouraged.

Finally, have you considered informing the insurers of your suspicions? Cards on the table is recommended in dealing with insurers and their reaction may add weight to the trustees position.

An interesting problem arises if the beneficiaries are the three children. Crowe V Appleby indicates that in the case of a house vesting in all beneficiaries is delayed until all are entitled to
a vested interest i.e. when the youngest child becomes 25. Does that apply if some of the beneficiaries have by their misconduct precipitated the sale and therefore the vesting of their contingent interests? And, depending what they have been doing, there
may be police confiscation applications against their shares of the proceeds of sale.

Tim Gibbons

Thank you.

The lady who died, J, had four children. A, M, J and I. A, M and J are adult children from her first marriage and I is the minor child from an unmarried relationship with P. M was J’s adult daughter and she had a daughter of her own, E, who is close in age to I. J wanted M to look after I along with E and P, who never lived with J, agreed to this. M therefore became I’s guardian after J’s death.

M sold her own house and moved in to the trust property. J had made it clear in her Will that the house was to be a home for all of her children until I was 25 so long as there was no criminal activity. J was well aware of her adult children’s addictions and A was actually in prison when I prepared J’s first Will.

M moved J’s mother into the house, and J was already there so the occupants of the house were M, J, I, E and grandma. A returned from time to time but his whereabouts have always been uncertain.

I received an anonymous letter in 2018 saying that grandma was in a state of neglect, and that there were problems in the house. I tried to involve the police and social services, without success. The current issue stems from a recent confidential conversation I had with someone who knows the family when I was told about the property being raided last year and when the police saw grandma and the state she was in she was immediately taken to hospital then care. The police found “all sorts” in the house.

M committed suicide earlier this year. This makes E, as her daughter, a beneficiary of the trust as she is M’s only issue. I is living with P in his house - P has never lived in the trust property. I do not know what has happened to E as she must be being cared for by someone else.

No one has seen J for a long time, so he may well be in prison. The house is therefore currently occupied by A and possibly J and I have little doubt as to the type of activity that is ongoing. A has a history of violence, particularly towards women, and I do not want to put anyone at unnecessary risk, .

I have considered the insurance angle., The company already knows about A’s prison sentence, but so far nothing else. As trustees, we have a duty to keep the property insured and if the insurance company insists on our finding out what has happened then that may be persuasive to the police. What we cannot do is disregard this, because if something were to happen to the house and the insurance company found out what we had been told but did nothing about it they could refuse to pay.

Many thanks.

Elainne Lawrie
PDA Law Solicitors Limited

The situation seems to be more complicate than it first appeared, which is not helped by the duplication of initials (and in a couple of instances, it is not particularly clear whether I is the writer or one of the children).

To my mind, this is probably an issue upon which counsel’s advice should be sought. The issues will include not only if the right of occupation has been determined, but whether it will be terminated for all, or just those participating in any criminal activity. Also there is an IHT issue, as each child would appear to have a right of occupation irrespective of whether they are in actual occupation. M’s death could therefore represent a termination of her interest in possession in favour of other beneficiaries.

Alternatively, if each child only has an interest in possession whilst in actual occupation, as they move in or out of occupation, a transfer of value could arise on each occasion which activity, being post-2006, could result in charges to IHT arising as they may well be immediately chargeable transfers. This is another aspect that counsel might opine upon, if relevant.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals