I’m an administrator & Trustee on behalf of a family who have asked me to look into a Share Sale.
Deceased owned 37.5 % Shares in a Company which he founded. 2nd Wife also owned 37.5 % Remaining 25% owned by a relative of the Wife.
Deceased requested that a discretionary trust be set up leaving his 37.5 % to his adult children from Wife 1.
Solicitors for deceased did not transfer the Shares into the Children’s names, however the Shares were valued & included in their IHT calculations.
Probate was then obtained. Immediately after,
Wife 2 sold her 35% + Deceased 35% to her relative. Company now owned 100 % by relative.
No Shareholder agreement in place & no drag & tag rights.
Wife 2 is an Exec. Same relative just applied to OPG to gain POA over Wife.
Can the Children make a case ?
On the basis of the information provided, it seems that wife 2 has acted inappropriately and the children of wife 1 may have a justifiable claim.
However, the positon might not be as straightforward as suggested and is the sort of situation where the advice of Chancery counsel should be obtained.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Make a case for what?
It’s best to break it down:
- did wife 2 have power to sell? You mentioned the shares passing into a discretionary trust. If Wife 2 was an executor and trustee of the will, and it was a testamentary trust, she may have been trustee of the trust and had power of sale under the terms of the will as well as statutory/common law powers.
- was wife 2 self-dealing? probably not as she did not sell to herself
- did wife 2 sell at an undervalue, either negligently or fraudulently? you haven’t mentioned the price being wrong.
- what happened to the sale proceeeds? you don’t say.
There could be various things wrong here or nothing at all. You need to take all the documents to a qualified solicitor.
Gd morning Andrew
Wife 2 is an Executor & Trustee. I cannot see anything in the Will which states she has sole rights to sell the Trusts Shares. Certainly she can sell hers if course but surely not the Trusts ?
She wasn’t self dealing.
No details have been given regarding what was paid for the Shares or where the money has been deposited.
Child beneficiary of the deceased was advised by the relative of Wife 2 that he had taken over the company.
When I checked on Companies house , I could see that Wife 2 & the Trust ceased to have an interest this Company and he had indeed purchased all of Wife 2s Shares + the Trusts Shares.
Have taken this to two Solicitors who cannot give me an answer. Hence posting here.
Hi Kathleen
You need to engage a solicitor properly as this needs a methodical review by somebody with the full (available) information in front of them. The technical law and potential remedies, as well as ways of finding out more information, don’t appear to be particularly difficult but the detailed facts are important: such as the number and identity of executors/trustees, dates, the precise terms of the will and any trusts, the history of communications between executors and beneficiaries and any estate accounts.
If you have actually instructed two separate solicitors (rather than spoken briefly) and given them the full details, so far as you can, and neither could offer you a view, then they were the wrong people. You should look for a member of STEP with a good few years of experience.
This forum is excellent (usually!) for discrete technical queries and matters of practice (like the mysterious ways of the Probate registry) but it’s not a good way to get answers to actual messy fact-heavy problems. They require proper conversations and analysis of the documents.