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Trusts and Estates Law and Tax Journal: November 2011

Sofie Hoffman assesses the current state of play with trusts and divorce

According to the latest statistics for marriage and divorce in England and Wales (2009 figures) released by the Office for National Statistics on 17 February 2011, marriage rates are the lowest since they were first calculated in 1862 and the divorce rate has decreased by 6.3% since these figures were published. Some commentators have argued that the decline in divorce rates is due to the challenging economic times; divorce seems to be a luxury that few can afford.

Zoë Sive discusses the divergent approach of the Jersey courts in the recent case of Re R [2011]

The recent judgment of the Royal Court of Jersey in Re R on 21 June 2011 marks a divergence of the Jersey law test for mistake from the current, narrower English law position, as recently established in the English Court of Appeal in Pitt v Holt [2011]. The decision in Re R reaffirms the earlier Royal Court judgments in Re the A Trust [2009] and Re the Lochmore Trust [2010].

Deborah Clark and Matthew Short give an update on HMRC’s stance on tax and employee benefit trusts

This article comments on HMRC’s Brief 18/11, which gives its views on the inheritance tax and income tax treatment of contributions to an employee benefit trust (EBT) by a close company.

Forsters LLP

Barrett v Bem sets an unusual precedent as Emily Exton explains

After a seven-year legal battle the will of Martin Lavin has recently been upheld by the court, in Barrett v Bem [2011], despite it having been signed by Mr Lavin’s sister to whom he had left his entire estate (valued at £300,000).

Rhys Thomas clarifies the link between payments from pension funds and IHT

IHT and pension schemes enjoy an odd relationship. Registered pension scheme (RPS) funds have traditionally enjoyed a much-publicised exemption from IHT. However, IHT law is notoriously complex and the general exemption from IHT has been riddled with potential exceptions. There are circumstances where an IHT charge could be triggered on the death of a RPS member. Somewhat confusingly too, IHT can (despite its name) sometimes be triggered before death, while taxes besides IHT can be triggered on death. The most significant recent developments have been:

Grant Crawford analyses Shovelar v Lane, which provides a salutary lesson for executors confronted with hostile proceedings

The recent decision of the Court of Appeal in Shovelar v Lane [2011] confirms the principle, well known to practitioners, that a nude executor who adopts an active role in hostile litigation does so at their own personal risk regarding costs.


Juliet Mayhew considers whether D v D is a template for maintaining the family farm on divorce

There is an area of West Yorkshire, between Wakefield, Morley and Rothwell known as the Rhubarb Triangle, famous since the 19th century for producing early-forced rhubarb. It was a farm situated in the Rhubarb Triangle that formed the subject matter of dispute in the case of D v D [2010]. The farm comprised an area of land that had been farmed by the husband’s family, initially as a small market gardening enterprise and, latterly, as a highly mechanised, efficient and dynamic business comprising farming, packing and processing operations. To a certain extent, this case might be compared to other dynastic cases involving the stewardship of farms or landed estates, because it involved an area of land owned and farmed by a particular family over several generations. However, the development and diversification of the farming business by the husband during the marriage years and the changes brought about by the husband’s own business acumen led the court to draw a distinction from other farming cases and thwarted the husband’s attempt to ‘ring fence’ his family farm in the division of the assets in the divorce.

Deborah Clark provides an update on family investment companies

Family investment companies (FICs) have been discussed for sometime now as a structure that offers a viable alternative to a relevant property trust. At first, however, they were viewed by many as not as attractive a structure as a partnership which was transparent for tax purposes due to the double tax effect of using a company. But, since 2006 there have been some significant changes in tax rates, which result in individuals now paying much more tax and companies paying less tax. The outcome of these changes has meant that the pendulum has now swung firmly in favour of FICs over partnerships. In fact, so much so that FICs are now being viewed not simply as an alternative to a trust that facilitates estate planning, but also as a suitable structure to own investments.