Where the recipient of a legacy under a Will wishes to redirect that into a trust, does the deed to achieve this have to include the Executors as a party or can it simply direct the Execs to pay the legacy to the trustees?
The executors do not need to be a party or even be aware. The legatee can create a trust by declaration or deed and settle the legacy. It is then impressed with the trust and the legatee is then bound in equity not to deal with it otherwise than according to the trust provisions created. The executors discharge their own obligations by paying or vesting the legacy in the legatee personally and leaving him/her to honour the trusts already created. This means that there is no need to wait to settle until actual receipt.
The executors are not required to be a party to the Deed of Variation unless it
gives rise to an additional IHT liability. Only the recipient(s) benefiting from the gift are required to sign.
I Will Solicitors
Whilst I agree with Jack, if a trust is being created by deed of variation I would generally recommend that there is a degree of liaison with the executors – to identify if there are any other trusts to which the new trust would be a “related settlement” under s.62 IHTA 1984.
The professional adviser could be criticised if an unexpected IHT charge arises due to the existence of a previously unknown/unrecognised related settlement.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I must have missed the reference to a “deed of variation” in the original question