Signing Trust Deeds

I recently read an article on the FT Adviser website which claims that new life assurance trusts can be set up using electronic signatures. The article - click here - was written by Ian Smart, who is a “product architect” for Royal London, who claims that all that is needed are current e-mail addresses and mobile telephone numbers.

The article states “This involves the customer making a declaration to their adviser that they want their policy to be written under trust. The adviser then completes the details of any trustees and/or beneficiaries online and submits the form to the insurance company. Once complete copies will be sent to the client and their trustees and no signatures are generally required.”

I have never come across trust deeds being signed by electronic signatures.

I would welcome any comments on this.

Philip Evans
Graham & Rosen Solicitors

The problem may be that if a deed is involved the signature should be witnessed and the witness should see the individual signing (see Law Society practice note: Execution of a document using an electronic signature.

Looking at the FT Adviser article, I think the customer can declare that he holds the life assurance policy on trust but I’m not sure how the benefit is then transferred to the trustees to hold for the beneficiaries.

I also wonder whether email addresses and mobile phone numbers provide sufficient evidence of the identity of the parties. Perhaps this could be solved by using blockchain technology?

I too would be interested to read what other forum members think.

Mary Ambrose
Thomson Reuters (Practical Law)

I am not sure this article necessarily supports the execution of a trust deed by way of electronic signature, it seems to me a process supporting the creation of a trust by parole.

Whilst what is created may be a valid trust, am I comfortable with the proposition – No. On a scale of 0-10, with 10 being “entirely comfortable”, it ranks about 1 for me.

How many of us, when asked to tick a box online, saying we agree to the service provider’s terms and conditions, etc., actually go into the document and read it through? Not many?

Will many, whether settlor or nominated trustee, go into the on-line trust instrument? For those who do, will there be an associated glossary to enable them to understand technical issues (e.g. If the STEP Standard Provisions are incorporated, will they also be set out, or there be a link to the relevant page of the STEP web site)?

Whilst I can see the benefit to the adviser/salesperson, my concerns also relate to the situation post the “sale”.

Does the settlor have a proper opportunity to read through the trust deed before they “approve” the creation of the trust? Once created, what evidence does the adviser and/or insurer retain to support both the creation and terms of the trust? In what form is this evidence held – can it be retrieved in a form acceptable to a court in the event of a dispute, perhaps 10 or 20 years down the line?

My experience of policies in trust has been mixed although, on the most part, my view is that the sales process dominates and the “niceties” that actually underpin the trust and its effective administration can too often be overlooked.

The trust document is often retained by the insurance/assurance company – rarely is it returned to the settlor (or any other trustee). It may be “scanned” and the original shredded so that the only evidence is an electronic facsimile, the quality of which may be questionable (or even deplorable). In any event, when asked to provide a copy of the trust, it is not unusual to be provided with a copy of the then current form used by the company and, when pressed, to be told that they have no copies of previous versions of such documents.

Despite having put a policy into trust, too often the settlor thinks they are still entitled to the proceeds of surrender. When pointed out to them they have no such entitlement, the usual assertion is that they never understood this when they created the trust. Whilst not conclusive, their “wet ink” signature on a paper copy which includes the provision that they are excluded from benefit, and supported by correspondence (if the adviser has gone that far), general helps to resolve such disputes. If there is no such paper trail, such disputes may proliferate and prove more time consuming to resolve.

It may be that Royal London has pre-empted my concerns by having already allowed for many of them within its internal procedures, the details of which are not shared in the article referred to by Philip Evans. If so, then “excellent”. However, others who follow suit with the basic client facing arrangement might not give, thus potentially creating many issues, both short term and long term, for the client and the trustees (whether immediate or replacement) and their advisers.

We are moving into an era where technology is king, and a failure to use it to the maximum is seen to be indicative of failure. Until, or unless, there are appropriate resources to properly support the wholehearted embrace of technological developments, such as that by Royal London, I believe it to be important to continue to apply existing Best Practice despite the fact that, currently at least, this is largely paper based.

For those who might think I’m a Luddite, let me assure them that I have set aside my quill pen (although it is still to hand in case my internet connection fails, again!).

Paul Saunders