US (Florida) Probate Trust as beneficiary under England and Wales Will

I have been asked to draft a will by a US (Florida) domiciled individual who has property in England and Wales, to include a longstop residuary gift to his probate trust which he has set up in Florida.

Is there any reason why he cannot do this? Assuming all is well, how should I express this gift? Would a gift to The Trustees of… work just as well as it would for an England and Wales trust?

Robert Lynn

His “probate trust” is probably an inter vivos revocable trust, commonly used in the US as a will substitute. Problems often arise where lifetime gifts are made to such trusts either by a UK domiciled individual or of UK situate assets, as these gifts would be immediately chargeable transfers to a relevant property settlement (unless it is possible to conclude that the trust is a bare trust for UK tax purposes, but this requires careful analysis).

If your client has instead instructed you to draw a will transferring his UK assets to his inter vivos trust, then the immediately chargeable transfer issue would not arise, however. You would need to consider, though, whether the terms of his US trust would confer any desired tax relief (marital, charitable, IPDI, etc.) You would also need to consider perpetuities, as most US states still have traditional lives in being rules, and a transfer of English real property into such a trust may cause problems without some special drafting. Otherwise, there is no reason he cannot leave his UK property to his US trustees by will.

Ian Watson
Barrister and New York Attorney

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Unlike California (where probate is costly) Florida (like New York for that matter) is not known as a probate-avoidance jurisdiction. There may be other information that might be useful to you. Florida, like New York, offers “tenancy by the entirety” to married couples, but unlike New York it is not limited to property (real estate) in Florida. You might also want to verify the quality of the RLT, and that it wasn’t cut and pasted from, say, Norman F. Dacey’s book “How to Avoid Probate!”. It’s worth noting that sometimes probate can be advantageous in the U.S. as it bears a short time bar for creditors. (Estate of a Lloyd’s of London debtor defeated Lloyd’s claim). There’s more on this point in this lawyer’s explanation:

Andrew Grossman