I have been presented with a case where the father of a very young child died as a result of an accident, the cause of which has yet to be established. The father’s life was insured with a Scandinavian insurance company and it seems that the company has made a discretionary payment in excess of £150,000 to another firm of solicitors based in Scotland who were acting for the mother of the deceased. I am not aware of the circumstances which led to the discretionary payment being made. The mother of the deceased and a family friend were granted letters of administration to the estate ( limited until the child attains 18) as the child’s mother did not wish to act and consented thereto. However, the payment is not an asset of the estate since it was made at the discretion of the insurance company for the child’s benefit. As the child, lives with her mother locally to my firm, the Scottish solicitors, quite understandably, feel that a local firm of solicitors should become involved in setting up a trust for the child.
My initial thoughts are that the type of trust which needs to be established should be a bare trust and that the settlor should be the Scandinavian insurance company which would be at liberty to decide who the trustees should be. The mother and grandmother would appear to be appropriate, although the inclusion of a professional trustee may be advisable. However I get the feeling that the Scandinavian company, having made payment to the Scottish solicitors, may want to wash its hands of the matter. I would welcome some views on this.
Patrick Moroney
BWL solicitors