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Trusts and Estates Law and Tax Journal: September 2011

Joseph Jaconelli finds Constructive and Resulting Trusts an invaluable guide for practitioners

This volume consists of 12 essays: six each on constructive and resulting trusts. Its origins are in a conference held in April 2009 at King’s College London. There already exist specialist treatments of the two types of trust in question: Oakley’s Constructive Trusts, Elias’ Explaining Constructive Trusts, and Resulting Trusts by Chambers (himself one of the contributors to the present volume). These essays carry their respective subject matters to deeper levels of analysis. Of the 14 contributors (some of the essays are jointly authored) nearly all are academics based in the Oxbridge-London ‘triangle’.

Shân Warnock-Smith QC examines the partitioning of ‘Freeston’ trusts in the recent case of Southgate v Sutton

On the ‘no bus for ages then all coming at once’ principle, the scope of s57 of the Trustee Act 1925 in England and Wales, and of its international equivalents, has recently come under the judicial microscope on several occasions, each of which has arisen out of the same (or similar) legal and factual context. In a number of instances it has proved either necessary or highly desirable to separate the interests of a beneficiary or class of beneficiaries (often for specific reasons of US tax, although there are a number of other circumstances that may also lead the parties down the road to partition). Friction between classes of beneficiaries or between one class of beneficiaries and the trustees is often best resolved by hiving the dissident group off into a separate settlement or sub-trust. However, the US tax example is probably the most useful illustration for present purposes, both because it was the central driver in the most recent English case on the subject and because it is such an extreme one. It is not unusual to find the US advisers telling us in a particular case that the US beneficiaries are at peril of losing the entirety of their interests by reason of the workings of the US accumulation distribution rules.

Sofie Hoffman argues for a flexible model of mediation to avoid costly litigation

The following phrase was recently uttered: ‘once we start irreparable damage may be done’. Not the words of the Parliamentary Committee when Rupert and James Murdoch recently appeared before them to give evidence as to their knowledge (or lack of) as to the News of World phone hacking scandal that has engulfed many members of the establishment, but those of Judge Patrick McCahill, who recently heard Diana Lindsay’s claim to a stake in Crawford Lodge in London, which is now estimated to be worth £3m on the basis that she had loaned her daughter £250,000 to purchase the property [Re Lindsay 2011]. Diana Lindsay feared the property would be lost if her 53-year old daughter split up with her twice-divorced husband. The judge rejected Mrs Lindsay’s claim, finding that the loan she had made to her daughter to purchase the property did not mean that she had a beneficial claim to it.

Serle Court

Cuppage v Lawson is an example of how the Charitable Trusts (Validation) Act 1954 is working in practice, as William Henderson explains

At a technical level this decision of HH Judge Hodge QC, sitting as a judge of the High Court, illustrates the continued usefulness of the Charitable Trusts (Validation) Act 1954 more than 50 years after it was enacted. The Act only validates trusts that were created, or purportedly created, before 16 December 1952, but there were many institutions set up in the late 19th and early 20th centuries that have continued to operate perfectly innocently and well with invalid constitutions (the invalidity of which has only been discovered when something particularly momentous happens in the life of the institution). Following Hart J’s rationalisation of the way in which the Act works in Ulrich & ors v Treasury Solicitor [2005], the Act often now ‘does what it says on the tin’ and validates trusts that would otherwise be void; Cuppage & ors v Lawson & ors [2011] is an example.

Rhys Thomas discusses the pros and cons of QNUPS

Qualifying non-UK Pension Schemes (QNUPS) have attracted a lot of attention since being introduced by the Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 (the QNUPS regulations) in February 2010 (with effect from 6 April 2006). The QNUPS regulations extended the exemptions enjoyed by UK-registered pension schemes from inheritance tax to such overseas pension arrangements as meet the QNUPS criteria. The QNUPS regulations are built on existing statutory provisions that recognise certain overseas pension arrangements as ‘qualifying’ to some extent for UK tax purposes. In particular, the Finance Act 2004 had enabled transfer payments to be made on a tax-efficient basis to Qualifying Recognised Overseas Pension Schemes (QROPS) with effect from 6 April 2006.

The court’s approach in Smith v Cooper sheds light on presumed undue influence in the case of cohabitation, as Anna Clarke relays

In June 2010 the Court of Appeal gave judgment in an appeal from HHJ Darroch in the Norwich County Court. This was another presumed undue influence case but it has added interest for parties and practitioners seeking to ‘unravel’ the consequences of undue influence in the context of cohabitation and personal relationships.

Sian Hodgson outlines a case that clarifies the standard of proof required to ‘prove’ a missing will

It is generally accepted that, as a matter of principle, a will can be proved even if the piece of paper on which it was written cannot be produced. Such a will can be proved if there is acceptable evidence of its terms and evidence that it was validly executed.

Christopher Kerr-Smiley sets out the powers and duties of bare trustees

All trusts can be categorised as either special or simple. Simple trusts are commonly referred to as bare trusts, and sometimes as passive trusts. A special trust, perhaps better described as a substantive trust, is the type of trust that most private client practitioners will deal with on a regular basis. There is some form of trust instrument, usually a deed, which imposes active obligations on the trustees to deal with trust property for the benefit of the beneficiaries described in the instrument. A special trust can be oral (except in the case of a trust of land), but this is unusual.