Trust created by Attorney - effect for IHT?

I am aware that an attorney who wishes to create a discretionary trust on behalf of the donor (who by the way has lost capacity) under an LPA P&F needs approval of the Court of Protection. The attorney proceeds without such approval and transfers money from the donor to the trustees who subsequently purchase a property and invest surplus cash into a portfolio. The attorney had no authority to make the ‘gift’ and therefore from an IHT point of view the assets in the trust effectively belong to the donor/donor’s estate. My question is whether on death of the donor the trust assets (valued at date of death not date of ‘gift’) would be treated as a debt due to the estate or whether there is eg a bare or resulting trust in favour of the donor or his estate?

Sara Anthony
John Hodge

Almost certainly a resulting trust in that situation.

There was a Jersey case on these exact facts (save it was an EPA), which confirmed the transfer was invalid and I imagine covered your point as well - R the CSI Trust, Brown Shipley Trust Co (Jersey) Ltd v Holland [2004] WTLR 321

Andrew Goodman
Osborne Clarke LLP