On a different tack, do C, D and E not need to sign to show their agreement to holding as joint tenants or tenants in common, or is this something the donor can impose upon them?
Michael Cutler
Colemans Solicitors LLP
As stated above there is no requirement for C, D and E to be parties to the DoT to make it effective. Preferably, it would make practical sense for them to be parties as this would constitute acceptance of not only the gift but also the relative %s to be held and whether as joint tenants or tenants in common.
Of course, should C, D and /or E not wish to accept the gift they could simply disclaim it and, strictly, such a disclaimer would not need to be in writing although again this would seem desirable.
Malcolm Finney
This is a great topic, and I learned from this thread that a trust is valid so long as the three certainties are established, regardless whether the beneficiaries are aware of the existence of the trust.
As one having no practice knowledge of UK trusts, I have a further question: once A and B declare the trust, will A and B need to file the trust document with title registration agency/authority or they can just keep the DoT in their locker without affecting the creation of a valid trust?
I remembered reading materials to the effect that they need to file such a paper with title registration but for purpose of constructive notice but not in any way affect the validity of the trust.
Please educate me on that.
thanks.
An interesting read indeed. I take it from this that I can reliably inform a client who is considering making a DOV redirecting his inheritance under his fatherâs Will to a discretionary trust which will be incorporated in the deed and which will name him, his spouse and his nephews and nieces and possibly others amongst the class of beneficiaries, that he need not divulge itâs existence to all of the beneficiaries and that provided the âthree certaintiesâ are met, the Trust Will be valid.
Patrick Moroney
Legal validity is not the be all and end all of the matter. My concern in commenting so far has been to dispel the apparent heresy that failure to communicate the existence of the trust intrinsically vitiates its essential effectiveness in law. There is much more law than that to consider.
Trustees have obligations of disclosure to beneficiaries, not just upon their request, although they cannot be expected to seek to pro-actively inform every single potential object of a discretionary trust with a wide class. Beneficiaries have rights under a valid trust whether they are informed of them, or of the trustâs existence, or not. If I were Patrick I would be advising the client about what he can expect the trustees to have to do, if they too are well-advised, about informing members of the class of beneficiaries in order to avoid breach of trust. They also have a trust fund to manage in future in the interests of that class without such breach. They need to be aware that even a discretionary objectâs attenuated right of due administration may remain live (even though dormant) for a vast period ahrad and any comeback for breach of trust may be visited not just on them and their assets but on those who succeed to those assets, however much later, without giving full consideration.
Trustees must have some permissible discretion in this regard e.g. where a potential beneficiary is considered at risk of spending any distribution on things that may destroy their health or that of others and where disclosure may stir up vexatious attempts to pressurise them (aided and abetted by providers of legal servicesâitâs an ill windâŚ)
We also have a more intrusive climate of compulsory external disclosure to third parties. Tax law has long require trustees to provide information to HMRC if they become under an obligation to make a return. HMRC are subject to taxpayer confidentiality, which they observe very carefully out of self-interest as breach would undermine confidence and promote wholesale evasion by non-disclosure.
The new system of registration under the Money Laundering regulations will soon allow anyone with a legitimate interest to obtain information about a trust whether it is tax paying or not. Typically the system does not exist yet and âlegitimate interestâ is rather a vague concept at present. It seems largely to be about those whom the Government considers âgood chapsâ, although how that is to be ascertained (or monitored, if at all) in practical terms is not currently vouchsafed unto us. Its prospective introduction has just been deferred for a second time to summer 2022 for IT reasons (here all may laugh or cry, as the spirit moves them).
As a conspiracy theorist I expect it to undermine taxpayer confidentiality and that it may even be a device to allow HMRC to disregard that selectively either when it suits them or when HMG want to override them. It is far from clear what remedies, if any, will be available to individual citizens for misuse of their information. It will create another valuable opportunity for them to gratuitously acquire a criminal record and to facilitate professionals whom they otherwise trust sending (without their being told) secret SARs to the NCA (who do not have the staff resources to process them efficiently).
So we move incrementally towards a world in which everyone is entitled to know everything about oneâs private affairs and, as in the GDR, for each of us to become either an informer or a perpetrator at risk of criminalisation, while the real crims carry on blissfully at scale, subject only to the Russian roulette of being detected, jailed and POCA-ed. I am more than happy for that outcome to be maximised but not with widespread collateral damage.
Jack Harper
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Thank you Jack for those wise comments. My main concern is that as the discretionary trust will allow the trustees to lend the trust fund to my client and take an IOU, notifying the other beneficiaries of the existence of the trust may result in them approaching the trustees with requests for funds which the trustees will not of course hold. However I suppose that cannot be avoided and beneficiaries will just have to wait until the loan is repaid which most likely will be when my client dies. Indeed at that stage a decision may be made by the trustees to lend the trust funds to my clientâs spouse who would be a discretionary beneficiary also.
Patrick Moroney
Regarding Patrickâs post, under IHTA 1984 s 142 the settlor of the discretionary trust created under the DoV is deemed (for IHT) to be the deceased not his client. However, in reality (ie the real world) it is his client who has settled his inheritance.
As settlor he is not under any obligation to notify either any beneficiaries under the trust (or indeed the trustees strange though this seems). However, the trustees are themselves under an obligation to notify the beneficiaries who are sui juris of the existence and terms of the trust. Failure will presumably constitute a breach of trust (?).
Malcolm Finney
Concerning Jason Tanâs question, in England and Wales under the Land Registration Act 2002 (section 33) any application for a notice relating to rights under a trust is expressly prohibited, nor is a restriction (apart from the obligatory Form A restriction) permitted, since any attempt to restrict disposition of the legal estate would be contrary to sections 2 and 27 of the Law of Property Act, 1925.
Clifford Payton
Alpha Court Chambers