Hi many years ago my late father set up a bare trust for his grandchildren with my sister and I as trustees for a bond with an insurance company. All are now in their mid 20s and as far as I can see their bond should be transferred to them. For some reason the insurance company wants a deed to transfer the assets, which seems expensive, for something that seems their right to access.
Question is do I need a deed? and how much would that be, or can we write it ourselves? Also as the bond is theirs can they just not ask for it to be transferred to them?
There are 3 possible places in which to search for the answer:
1 The terms of the bare trust;
2 The terms of the contract with the insurance company;
3 subject to 1 and 2, the general law.
I presume the bare trust was in writing. Unless it was made by deed I should be surprised to find that a transfer of the trust property to those entitled had to be made by deed, particularly as that property is not land. The insurance contract will surely be in writing and again I would be surprised if it stipulated that a deed was required. If it has specific provisions dealing with transfer it is the line of least resistance and least costly route to follow them unless the company agrees to accept some other method which would be valid under the general law.
Under the general law the benefit of a contract or an insurance policy (a “bond” is just a supercilious name for one or other or a combination of these) is transferable by an assignment in writing with notice to the insurer, unless there is a clause in the contract prohibiting assignment. It is not a type of contract that is simply incapable of being lawfully assigned, like a contract for personal services.
A deed is required in law to transfer a legal estate in land but an intangible asset can be transferred by writing. The insurer here is entitled to notice so that it can ensure that it pays the correct person and so obtains good discharge.
It is a criminal offence for an unauthorised person to prepare a document transferring land or other property (though not a will) but a person " is exempt if the person is an individual who carries on the activity otherwise than for, or in expectation of, any fee, gain or reward".
So you could lawfully draft your own document if you have the necessary expertise. I draft all my own legal documents but then I am a retired solicitor and tax consultant; however I do not attempt brain surgery or deep sea diving or bomb disposal.
I have never had to ask an insurance company this but as they are very adept at producing standard documentation, such as trust wordings, they may be able to give you an indication of what drafting they might accept. I would start by simply asking them to say why they are insisting on a deed and to quote you chapter and verse to back up their position. My experience is that their in-house legal people are invariably switched on and you may need to ensure that it is passed up to them. Last year I had a problem changing a trustee on one of mine and the insurers initially rejected my documentation because it did not consist of a single deed signed by all the trustees (new, continuing and retiring). The footsoldier did not understand counterparts and it needed a quick intervention by an officer to set him right.
I hate to mention this but who is the trustee of the bare trust now your father is dead? Whatever document ultimately proves acceptable you may have to appoint a new trustee if that has not already been done. Even more hard to hear is that the trust is registrable on the Trust Registration Service and an insurance company may not be able to act now without proof of registration, in addition to its other customer due diligence in relation to any assignee.
Thank you Jack for such a comprehensive reply. I am at a loss as to why they need a deed and they seem to not answer the question. The company says it will not advise on the deed but can say if it is suitable. Given the amounts are relatively small, I feel like writing it myself, along the lines to transfer to my son.
I don’t understand why they cannot just ask the company to make it over to them as at 27 they can disregard the trustees anyway.
My father effectively was the settlor along with my mother, my wife and sister are the trustees, and I have registered with the TRS which is what has brought it to a head.
You should try deep sea diving, it is much easier than you would think.
Most providers will require a Deed of Assignment to confirm that the Trustees wish to transfer the legal interest of the Policy to the Appointed Beneficiaries and that the Trustees and the Appointed Beneficiaries want to terminate the Trust in respect of the Policy.
Most providers will have such a deed available as a draft document (for example Canada Life have: https://documents.canadalife.co.uk/deed-of-assignment-of-a-life-assurance-policy-to-an-absolute-beneficiary-under-a-trust.pdf)
Thank you for that Francesca, I have spent ages trying to find something similar as a lover of plagiarism since an early age. My only other real query is why can the beneficiaries not just tell the company to do it being of majority.
The legal title to the policy is held by trustees of a bare trust. The equitable interest in the policy belongs to the beneficiaries. Thus the legal and equitable titles are held by different persons.
However, as the beneficiaries are all over age 18 they can compel the trustees to transfer the legal title to the beneficiaries; the beneficiaries will then hold the policy absolutely and could do whatever they want with it (eg cash it in; sell it etc).
However, in the absence of possession of legal title the beneficiaries are unable to give any instructions directly to the insurance company.
Very interesting Malcolm, think that answers my question, thank you. Out of interest if the trustees refused to transfer legal title, what recourse does the beneficiary have, as this must happen reasonably often?
Not something which does happen very often.
The trustees will have failed to carry out their duties and a breach of trust will have occurred. The beneficiaries may then bring a claim for the breach of trust. The beneficiaries may seek removal of the trustees and/or compensation.
If appropriate an approach to the courts seeking advice as to what to do can be made.
Thank you, Malcolm, it was just a question of what happens.
The insurance company will not comment on an electronic draft of a deed and must see the original draft. Why would that be?