I am looking at a Will that leaves 50% of the residuary estate - “to be placed in a Trust Fund (“the X Family Trust Fund”) to be invested and distributed by my Trustees at their entire discretion in accordance with any letter of wishes I leave for them.”
There are no further Trust provisions in the Will at all and the X Family Trust Fund was not set up by the deceased Testator or any other family member during their lifetime.
The purpose was to ringfence the 50% share for a family member with learning difficulties. There is a side letter.
I have never come across the lack of a Trust deed or provisions in the Will and firstly wondered if the bequest has failed for lack of certainty of objects but now wonder if it is permissible for the Trustees to set up a lifetime settlement now, being Trustees of the settlement and naming it the X Family Trust Fund and specifying the beneficiaries referred to in the side letter so that the bequest does not fail.
The trust limitations seem to be uncertain and risk causing a partial intestacy.
However 2 possible alternatives:
1 Half Secret Trust
The residuary bequest is plainly given to “my Trustees” so the problem is that the wishes of the deceased must have been communicated to the trustees before or at the time of executing the Will and the trustees must have accepted. The wishes must be coherent enough to clarify what the trusts are to be so that the trustees can administer them and they surely must not be explicitly non-binding.
This is a stronger requirement than for a fully secret trust where the communication can follow execution.
2 s.143 IHTA “precatory trusts”
These are binding trusts in that the legatee cannot take beneficially but the wishes can be non-binding unless incoherent. The 2 year limit is purely an inheritance tax rule. Whether this gift fits the bill is a matter of specific construction. I would be hopeful but unlike my female relatives I am unable to unerringly discern the nature of an object or indeed verify its existence while blindfolded in a pitch black windowless room.
The letter of wishes in each of the above 2 cases does not have to be properly executed in a manner permitting admission to probate, though presumably they are clearly testamentary in import.
There may be a third possibility.
The letter might conform to the rules about incorporation by reference. The document must be clearly identified in the Will and must exist at the date of execution but the executors can learn about it later. The contents must be intelligible and sufficiently certain in order not to be impossible for the trustees and a judge to parse. So a matter of construction. Again I would be hopeful but only from my vantage point of total darkness.