Protecting interest of Will trust remaindermen where there is a Land Registry restriction

Trusts Discussion
1

W owned her property as tenants in common with spouse, H. She left her share on a life interest for H and remainder to children from a previous relationship (WT). The question is how to protect the interest of the remaindermen (without considering CGT or SDLT implications). A similar question has been posted previously and the general recommendation seemed to be to get the property transferred to the trustees. But if H won’t participate in a transfer then that won’t work.

Has anyone tried registering any restriction to protect the interests of the remaindermen in a similar situation that has been accepted by HMLR?

The HMLR position is that:

  • the legal estate is already held on trust (as evidenced by the joint proprietor restriction) as between H and the estate of W;

  • an application to register a restriction relating to the interests of the remainder men under the WT relates to their beneficial interests and so is in respect of their equitable interest;

  • therefore any limitations on the trustee’s powers contained in the WT do not affect the legal estate in the property.

Does anyone see a way round this to protect the interests of the remainder men adequately?

2

Particularly after Gosden v Halliwell Landau, there’s a school of thought that a Form B restriction could be useful along with the usual Form A. This would require a stat dec or conveyancer’s certificate that the disposition was in accordance with the terms of the trust. If, therefore, the trust contains a limit on the trustees’ power it might be worth considering (e.g. if the trustees only have power to sell with the beneficiaries’ written consent).

Ultimately, though, I would’ve thought that the beneficiaries’ interest is in the proceeds representing the property rather than the actual bricks and mortar. Could that mean that HMLR will refuse to enter the Form B restriction?