Hi, the scenario is H has passed away, property is not registered and deeds show that the property was in H’s sole name. A notice of severance is with the deeds, this seems to have been a mistake as there was never a JT in existence to sever. However, as he has declared in writing and signed a document which states that the property is to be held for them both as tenants in common in equal shares, although he has gone about it the wrong way, would you agree that this still amounts to a declaration of trust. There is the intention there for wife to have a 50% share, so do you think that this document is sufficient to give W a beneficial interest in 50% and so only 50% can now pass via H’s Will?
A notice to sever will almost certainly evince the lack of the necessary intent to create a trust. The certainty of words ingredient seems to be missing. Although particular words are not essential, not even the word “trust”, the actual words used must demonstrate an intention to create the legal relationships which constitute a trust. Ironically an effective severance creates an implied statutory trust. A notice of severance would not normally declare an express trust but if it did that might be helpful; the problem remains that the declarer’s mind was probably on the face of it addressing a situation that he thought existed rather than a different one he was intending to bring about.
The document here is a nullity for that purpose and so the question is can it nonetheless satisfy a different purpose. Lay clients often do not know the precise legal consequences of documents, only the broad purpose of what they seek to achieve by them. Often that will be as advised by a competent professional. If such advice was given here it is scarcely possible to argue an alternative intention. If not it would be essential to produce some cogent evidence of intent to support why H used the words he did, not merely to change the ownership of the property but to do so by creating a trust. That seems a very tall order to me. Nor can it be regarded as a gift: H has not done all he could to give W a share in the property (unless the document is a DOT made with that very intent).
There may be a hinterland of facts as to why H used such a document. These might have given rise to an earlier promissory estoppel. In such cases the usual position is that the promisor has done nothing at all to honour his promise but using an inapt document to deliver on it would not prevent the doctrine operating.
Here H apparently was under the impression that he already had a co-owner. It is possible that such belief was grounded in an earlier promise made to W. W must show that the promise had such a material effect on her to her detriment, by her acting or refraining from acting, that it would be inequitable not to enforce H’s promise.
While those involved and affected might simply agree among themselves that this was indeed the position the terminal sceptics at HMRC will probably not accept it without litigation. However “the application of equitable estoppel” is in the non-exhaustive list at IHTM09072 of “some of the situations where a negotiated settlement may be appropriate”.I expect a lot of farmers’ PRs may soon be putting their arguments forward where the promise was made more than 7 years before death!