I have a client who owned a property T in C with his late wife. The wife left her half share under a life interest trust for his benefit. He wishes to sell his property and purchase another property to live in but wanted to gift his half share of his property to his daughter so that she would be on the title owning one half share with the trust owning the other half. They have been advised that the trust cannot own property with anyone other than the life tenant. There is no express provision for this within the Will and I couldn’t find reference to this either, is this correct?
If it is correct, can they instead execute a declaration of trust gifting his equitable interest to the daughter instead or can the trust fetter this? They have been advised re GROB and also care fees etc
Not sure if I understand the question correctly.
On the facts stated, the surviving “T in C” would have become the sole surviving “Trustee of Land” i.e. the sole owner of the legal estate [his late wife’s beneficial interest would presumably remain with her executors/trustees, now acting effectively as beneficiaries of the Trust of Land, which is obviously quite different to the trusts declared in the late wife’s will].
As sole Trustee of Land, H [if I may refer to him as such] can appoint a new co-trustee of land of his choice; so why not appoint the daughter [if of age/capacity etc]? She would then become co-owner of the whole legal estate, albeit subject to the respective beneficiaries’ rights.
As a separate matter, H could choose to transfer/sell/gift his beneficial interest [or part of this] to his daughter, or anyone else - on what grounds could anyone object to this?
I would suspect that whoever drafted the will may have misunderstood the situation and therefore included restrictions which are not actually applicable, yet Gemma says not [unless the unnamed advisors have also misunderstood the situation - or are trying to protect their insurers?]
H is a trustee of his late wifes Will along with two other people (who are then the trustees of the life interest trust with him). The Trustees have no objection to the sale of the house that was in the name of H and his late wife (with her half being left under a LI Trust) but they have issues with the purchase of the flat, which was to be in the name of the daughter and the trustees of the life trust.
The other trustees have gone and taken legal advice as to their position as trustees and the flat purchase and they have been advised that H cannot gift his share of the flat to the daughter as the trustees cannot own property with anyone other than the life tenant. So the flat that is being purchased has to be in the name of H and the Trustees and cannot be in the name of the daughter and the trustees. There is no express provision in the Will to say that any property owned or part owned by the trust has to be in the names of H and the trustees only. In addition, I would assume that the costs for their legal advice will come from the trusts share of the sale proceeds only as I am sure that will be the next issue!
Edit - the solicitors who are advising the trustees didn’t prepare the Will
Interesting. But it still seems that there is some confusion - particularly over the fact that this scenario concerns two separate trusts, with different trustee(s).
I can see no reason why H cannot appoint his daughter [assuming full age etc] as co-trustee of the trust of land. Also, I can see no reason why he should not be able to make a gift of his own share of the trust of land [apparently half] to her.
The other trustees and their advisors seem to be rather vague so should be asked to specify precisely what authority they are basing their advice on. Possibly ToLaTA ?
I fully agree that costs are best avoided wherever they may fall, but if matters were to progress is it relevant that trustees normally act together - yet two of the will trustees have opted for separate
legal advice? Perhaps they should be personally responsible for those costs?