The casemine, Hopes v burton and ors, 2022.
The 2 deeds of appointment by trustees,2013 and 2014, were submitted for mistake.
In 2022, the court agreed and the trust was put back to its original state, new trustees have been appointed as replacement trustees, these new appointed trustees are also the legal advisors within the court case.
Since the trust is back to its original state, the 4 beneficiaries are named and given equal shares of the fund.
The 4 beneficiaries are sui juris, and their is no other possible beneficiaries now, the trustee has told 1 of the beneficiaries that they have to give away their interest to the other 3 beneficiaries, if this beneficiary refuses, then her daughter, who is also a beneficiary will suffer the consequences, she also has to sign an agreement to stop fighting a follow up case too.
They other 2 named beneficiaries have no Nrb available, so basically i believe they want to use the funds of the revoked beneficiary to pay iht.
If the trustees cannot revoke the beneficiary interest but need the beneficiary to disclaim their interest
What sort of trust is this,
This post comes very close to seeking specific advice which is not the role of this Forum. I disclaim giving it.
The format of the policy trust is something that can be analysed in the abstract as it is set out, so far as matters, in the judgment at [2022] EWHC 2770 (Ch). The advice quoted at para 23 is strictly inaccurate: the 4 IBs do not have life interests but absolute interests subject to defeasance by the trustees’ powers. These are however also pre-March 2006 QIIPs for IHT. They not only allow the the trustees to appoint to a class of PBs, which includes the IBs: paras 17 and 18. Most unusually they have an unusual and draconian power to exclude any PB from the class of PBs. This would include the power to exclude an IB from being a PB but not from being an IB itself.
The power in Section 5 Part 1C (para 18) applies to any “Beneficiary”. This is a defined term which is not set out but cautiously I presume it means any IB or other PB.
My tentative conclusions are:
1 The trustees are firmly in the driving seat. It is perfectly reasonable for them to put to all living “Beneficiaries” a scheme of distribution/rearrangement of their interests. The judge refused to substitute the rearrangements made by mistake so those interests are solely governed by the original trusts and trustee powers. It is also reasonable in principle that the trustees should ask those who do agree with the new plan to record their consent to it.
2 One or more “Beneficiaries” can object but must bear in mind that disadvantageous consequences may ensue if the trustee powers are validly exercised as planned or as amended after consultation.
3 Those powers are very wide and permit the trustees to exclude someone altogether. But they must all be exercised properly. The terms of exercise must be absolutely clearly permitted by the trust. They must not be exercised capriciously or unreasonably or, without good reason, contrary to the wishes of the settlor, if known. They should certainly not be used to punish a beneficiary who objects to their planned use out of pique or spite. Given the history and the size of the trust fund the trustees should be especially careful not to make a void or voidable appointment or even a highly contentious one, as more litigation may then commence and the costs might not be visited on the fund itself. In an extreme case the Court might replace them.
4 The Court did not approve or disapprove of the actual provisions in the mistaken deeds of appointment. It held that they did not accurately carry out the plan: paras 44-46. And that the tax consequences were deleterious and unforeseen: para 59. It seems entirely possible that the trustees could formulate another plan, avoiding those mistakes, which faithfully carried into effect the original agreement:para 25. Presumably that would find favour unless anyone now objects.
5 I do not know why you say there are no other PBs than the 4 IBs. There must surely be potential PBs within Box A 1-3 and perhaps 6. Unless they are all living and adults the trust cannot be terminated by the agreement of all eligible beneficiaries. They might then be able to sack and replace the trustees under s19 TLATA 1996 which would avoid the tax consequences of termination.
6 The trustees have very wide powers but would be well-advised to use them lawfully and judiciously and not against the reasonable wishes of any beneficiary without having a solid reason for doing so. The beneficiaries should take independent advice, together or separately if their views diverge. That advice should cover the likely recovery of costs as a first item on the agenda because the trust gives no entitlement to the trust fund other than that of the IBs to income of which there is none from the policy if still in place.
7 The tax implications of managing a non-qualifying policy, if that is indeed its nature, need to be borne in mind. If the policy is in place (they often run for a finite period despite the death of the settlor) the trustees must consider whether it remains a suitable trust investment. I know of a case in which the chosen route was to transfer the ten sub-policies (a common feature) to the IBs, which is free of IHT, and for them to then make PETs/CLTs and/or spread the income tax costs by staggered partial surrenders. Trustees would be most unwise to surrender the policy themselves if the alternative would clearly be of benefit to the beneficiaries.
Jack Harper
Thank you Jack,
4 IB are the only ones who decide, the PB’s have been excluded, as stated by the new solicitor trustees.
A few years previously before the case, counsel examined the trust which held the policy, counsel stated that there is questionable trustee actions and their statements about the policy and its workings…
One question was asked whether there is a deed appointing additional trustees, and the counsil could find no evidence of a trust being created, no sui juris 4ib were told about their trust and their interests…
This is part of the findings, no need to reply, as you’re quite right, thus is a forum for professionals
Jack Harper,
you were kind to reply to this post, trustees are going to terminate the trust, no possible beneficiaries are being included, been no mention at all regarding the PB’S. 4 adult beneficiaries is all there is, but trustees are saying this, if 1 of the beneficiaries, ( who is the 4th named beneficiary) does not revoke their own interest in the funds, then the 3rd beneficiary, ( who is the daughter of the 4th beneficiary) will get nothing. the 4th beneficiary is basically getting threatened about the welfare of her daughter with not being given funds. basically if the 4th beneficiary signs their rights away, all 3 beneficiaries recieve their share… these trustees are the new appointed trustees from the retiring trustees as mentioned in Hopes v Burton… the new trustees were the solicitors who acted for the casemine on behalf of hopes and carney. just wanting to know if this is legal
It is most unusual for trustees to be given a power to terminate the trusts. The 4 default beneficiaries here cannot under Saunders v Vautier because of the existing power of appointment. The trustees can decide not to exercise that and to “terminate” the trust by an exhaustive distribution of the trust fund. Unless they have a specific power to distribute unequally to the 4 default beneficiaries they must follow the trust instrument and do so equally.
Sometimes the objects of the power of appointment comprise or include the default beneficiaries and trustees can effect an unequal distribution by exercising the power of appointment in part in favour of one or more of them; but any part not so appointed can only then be distributed equally.
Jack Harper
Thanks Jack,
I know it sounds that I am making it up,
But, my wife and her mother, who are beneficiaries 3 and 4.
The trust corporation, being T.S and Passmore. Are basically saying, if beneficiary 4 does not disclaim their funds then beneficiary 3 will not get her house or 150k…
They’re playing with heart strings between mother and daughter… no adult beneficiary was told about their interests and status in the policy. Trustees kept it hidden for some reason, my wife has tax deducted for self assessment, for a will trust, Trustees demanded that my wife should relinquish her tax rebates, for a tax pool…
When the trustees, that being Richard Hopes and Trevor carney, said they were appointed by the original retiring trustees, this is a scam.
Original trustees never knew that they were trustees of the policy.
One of them was told he had to retire, he said that he never appointed anyone to be a trustee, and it wasn’t a deed he signed, the other original trustee said, he hasn’t been contacted at all, not by Richard, or skandia…
The only time he has ever heard about this policy is when I contacted him in 2021.
Thats the year my wife found out about her interests in the life assurance policy.
Also, skandia said this, there was no death certificate from Richard Hopes, the policy was terminated and tax paid, certificate of tax paid was in the name of the donor, before she married her second husband…
I can go on forever saying all the evidence I have, I have been a pain in the bum within the trust discussion group, asking questions etc. I read so many questions and answers from others too…
Beneficiaries 3 and 4, have been tarnished by false claims, the second husband of the donor has steered the policy away, and the trustees have based these verbal assaults to diminish the funds.
The trustees settled the costs of the case and the costs of us fighting them, using just my wife’s funds, B3
If I could ask a last and final question, where do I go from here, everywhere I go seems to be answered with the term, Discretionary…no rights…
Thanks for the message Jack,
Means alot
Jai
Regarding the previous posts, the new trustees, said that they could transfer the house outright, in the name of the occupying beneficiary, the fourth beneficiary, who had their interests terminated, has been offered a cash settlement.
The beneficiary occupying the house, was told that no capital/money will be given…
Again, no discretionary beneficiaries are mentioned,it seems the life policy was terminated by the trustees in 2013, trustees said that the donor wanted to terminate it in 2001, then the trustees resettled into a flexible/discretionary trust…
Casemine of hopes v burton, never mentioned this…
But the outcome for us seems good…thought i would let the people who commented know
Good Evening All, You may of heard about a court case, Hopes v Burton 2022
The new trustees, who were also the law team within this case have offered us the property we live in and registered to my Wife, and £100,000 to her mother who had her interests terminated. Trustees stated that our children will be excluded as possible beneficiaries with no future interests.
The mother’s fund is being used for any tax for the 1 of capital payment. basically that is £342,00 being withheld…
I would like to thank all those who commented on the numerous posts that i posted…
This Group for me has been a great help,
Thanks for helping me to get something for my family.
Kindest Regards
Jai