Validity of Trust

Trusts Discussion
1

A trust deed was signed last year and the Trust Fund was defined as

  • property transferred to the Trustees to hold on the terms of this trust; and
  • all property from time to time representing the above. There was no reference to any schedule or what the trust asset was.

The Settlors had intended at the time to either transfer funds to the trust to buy a property in the future or to buy a property and transfer to the trust. This did not happen at the time. I understand that in order to create a valid trust, the property to be affected by the trust must be either expressly designated or so defined that it is capable of being ascertained, otherwise the trust is void for uncertainty.

Can the Settlors now buy a property and transfer this to the trust they had purported to create last year so that the trust is now valid or would they need to sign a fresh trust deed?

2

The trust is not invalid simply not completely constituted and so pro tem unenforceable. It could be abandoned but if its terms remain entirely satisfactory then the newly acquired property could be transferred to the trustees or by DOT. If relevant that date will be the commencement of the settlement for s43A IHTA. Joint settlors are a pain despite s44(2). No such provision in s68A TCGA 1992 although para 6 (6) Sch1C acknowledges a joint settlement in relation to the annual exemption.

Jack Harper

3

Thanks very much Jack