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Trusts and Estates Law and Tax Journal: September 2014

Geoffrey Shindler is perplexed by divergent approaches in major judicial decisions

Very early in our careers we all learnt that, in the Middle Ages or, if you prefer the term medieval times, equity was invented because the King’s courts looked solely at the documents in front of them; all the arguments then were about land which was the only real source of wealth. Equity was invented so as to ameliorate the harshness of this approach; a difference was created between the law, which was very strict, and equity which had a more subjective approach to a problem. An early example of the difference between law and justice.

Mark Pawlowski examines to what extent it is possible to make a deathbed gift of land

Essentially, three conditions must be satisfied for an effective donatio mortis causa of land. First, the gift must have been made in contemplation of death meaning ‘not the possibility of death at some time or other, but death within the near future, what may be called death for some reason believed to be impending’: Re Craven’s Estate [1937] at 426. Secondly, the gift must be intended by the donor to be conditional on death. The effect of this requirement is that the gift remains revocable by the donor at any time prior to their death. Thirdly, the donor must part with dominion over the property before their death – in other words, there must be a parting with the donor’s ability to control the property: Birch v Treasury Solicitor [1951].

Roadchef is a straightforward application of Hastings Bass to an EBT, finds Marilyn McKeever

In the case of Roadchef (Employee Benefit Trustees) v Hill [2014] Proudman J applied the rule in Re Hastings-Bass [1975] as clarified by the Supreme Court in Futter v HMRC (with Pitt v HMRCC) [2013]. The case is also a salutary reminder that an employee benefit trust is first and foremost a trust and the trustees are subject to the same duties in exercising their powers as any other trustees.

Ailsa Moorhouse sets out a case that upholds a person’s right to leave their assets to whoever they choose

In some European countries strict legal rules dictate that certain ‘forced heirs’ are automatically entitled to receive large portions of the estate of a deceased relative, regardless of what that person’s will may say as to how they would have liked their estate to be distributed. In contrast, it is a fundamental principle of English law that a person may leave their estate to whomsoever they choose. This freedom was once again upheld in the High Court case of The Vegetarian Society v Scott [2013]. Having been asked to consider the question of testamentary capacity, HHJ Simon Barker QC noted that provided a person has that necessary capacity they may choose to make dispositions in their will that are: Unexpected, inexplicable, unfair and even improper, or surprising, inconsistent with lifetime statements, vindictive or perverse or hurtful, ungrateful or unfair to those whose legitimate expectations of testamentary benefit are disappointed. What is more, would-be beneficiaries can find their financial position worsens as a result of the legal costs incurred if they undertake unsuccessful litigation in this unpredictable and costly area and particularly if they do so in a manner of which the court disapproves, as demonstrated by the costs order made in Re McKeen; Viva! Campaigns Ltd v Scott [2014].


Graeme Nuttall OBE sees employee ownership trusts as the perfect succession solution

Too many owner managers have overlooked employee ownership as a business succession solution. New tax exemptions should ensure that the indirect employee ownership business model achieves the recognition it deserves: one that provides a neat exit that is good for a business; good for employees and good for the UK economy.

James Hardaker and Tom Collins look at lessons to be learned from Best v HMRC [2014]

Business Property Relief (BPR) is a valuable IHT relief for those clients who own shares in companies or have an interest in a business which qualifies for BPR. When advising clients as to the availability of the relief, it is important that business structures are carefully analysed in such a way as to determine whether the relief is in fact available or whether it will fall foul of one of the notable limitations.

Schomberg v Taylor demonstrates the high evidential burden of challenging a will under undue influence. Mark Keenan and David Hickott explain

There are various grounds upon which a challenge to the validity of a will can be based and often cases will be pleaded in the alternative. It is perhaps easy to see why clients, angry that a will makes unexpected provision for an opposing party, would be attracted to arguing undue influence if the facts indicate their involvement in the will making process. In the case of Schomberg v Taylor [2013], the first and second defendants who counterclaimed were able to meet the burden of proof, but the case highlights some of the difficulties that practitioners need to be aware of when dealing with allegations of undue influence.