I wonder if anyone can help me.
One of the former Solicitors of my firm created a large number of pilot trusts with the initial trust asset being a £10 note stapled to the Trust Deed.
What is the position for those pilot trusts which have not had received any further assets once the current £10 note is no longer legal tender? Does the trust still hold assets? Do we need to replace the old £10 notes with new ones before the current ones cease to be accepted by banks?
On a wider note, what is the position of a trust which holds assets which deteriorate to a nil value or where all the assets are destroyed? Does that automatically mean the end of the trust?
No doubt I’m missing the obvious but responses will be most welcome
I consider a trust will continue to exist all the time that there are assets subject to it, whether such assets are tangible or intangible.
In the case in question, even if the £10 note ceases to be legal tender, it will still have value to a collector.
Additionally, if the trustee has failed reasonably to safeguard the assets of the trust, the trust might also include a chose in action being a right to be compensated by the trustee for any loss so attributable.
If assets have a nil value, such assets are still subject to the trust. If all the assets are destroyed, is there an insurance claim or other right to restitution or compensation which effectively replaces the destroyed asset(s)?
A trust will be brought to an end by there ceasing to be any assets subject to its terms. If the trustees of the pilot trusts take the £10 for disbursements or fees, the trust will cease to exist. Although further assets could be given to the trustees, that would create a new settlement “on like terms”, rather than restore the original.
I refer specifically to “assets” subject to the trust, rather than “value” as there may be many instances where a fully enforceable trust has a negative value (e.g. loan trusts, or where the sole asset is a property charged as security for a loan).
This is the reason that all of our pilot trusts are allocated a file number and have their initial funds held on our client account.
Elliot, Bond & Banbury
I believe that even if the notes cease to be legal tender banks, and if not then the Bank of England, will always exchange them for new notes. Each bank note contains the BoE’s promise “to pay the bearer the sum of…”. There doesn’t appear to be a time limit on this promise.
Coles Miller Solicitors LLP
Genuine Bank of England banknotes retain their face value for all time and can be exchanged at the Bank of England in London. Banknotes of this type can be exchanged either by post or in person. This service is free of charge.
Rawlinson & Hunter
I appreciate I am coming to this thread late, but, with regard to holding the £10 on client account, I wonder how others deal with the problem of the Solicitors Accounts Rules requiring that we write to clients each year when we are holding static client balances? I believe the Accounts Rules also prohibit holding client monies attached to trust deeds.