Last updateTue, 24 Feb 2015 5pm

Trusts and Estates Law and Tax Journal: September 2016

There is a difference between privacy and secrecy. Geoffrey Shindler considers common terms used by politicians and the press about the trust industry

It would be flying in the face of the obvious to suggest that at the moment the trust industry does not have problems. It has had problems before and overcome them, so there is no reason for panic, but there is very much a reason for deciding on a strategic approach to the problems that we now have. Those of a historical bent will remember that in the time of Henry VIII he was not only trying to find a wife who would bear him a son but he was also desperately short of money and decided that the sixteenth century trust industry had too many tax loopholes. Sound familiar?

Brabners LLP

Duncan Bailey reviews the latest version of Ray & McLaughlin’s Practical Inheritance Tax Planning

What an initially daunting book: 45mm thick, 900 odd pages and no pictures or thumb spaces between the words.


Liz Braude gives the lowdown on the jurisdiction of the consistory courts, with reference to recent cases

Few practitioners have experience of the consistory court, an ecclesiastical court, which can trace its origins to the 11th century and the arrival of William I in England. While many functions of the ecclesiastical courts, such as probate and divorce, have moved to the civil courts, the consistory court retains jurisdiction in matters relating to church buildings and to consecrated land. Each diocese has its own consistory court which is presided over by a chancellor – a lawyer of at least seven years standing. Applications to the court are in the form of a petition.

Howard Smith summarises the position on the bestowing of gifts and other benefits when a person lacks capacity

In cases where a person (P) lacks capacity to manage their financial affairs, questions often arise of whether P’s assets should be used to make a gift or confer some other benefit on a third party.

Claire Randall and Katie Allard outline the tax implications of Bowring v HMRC, which concerned a scheme to reduce CGT on capital payments by a trust

In Bowring v HMRC [2015] the Upper Tribunal found that a scheme designed to reduce capital gains tax due on capital payments by a trust, commonly known as the ‘flip-flop II’, was effective. This case is, of course, of interest to those who implemented flip-flop II schemes before anti-avoidance legislation was introduced to block them in the Finance Act 2003. This type of scheme is no longer effective. However, the judge’s reasoning on the meaning of indirect transfers to beneficiaries under s97(5) of the TCGA 1992 is generally applicable. The judgment therefore provides a useful insight for those involved in tax planning as to how the courts are likely to decide on similar issues in the future. However, before undertaking a more in-depth analysis of the Upper Tier’s decision, it is first useful to set out the main provisions of the legislation and the basis upon which the parties deployed their respective arguments.

Scott Allen and Josh Folkard highlight a case brought by disappointed beneficiaries against a financial adviser

In the interesting recent case of Herring v Shorts Financial Services [2016], two disappointed beneficiaries attempted to blame the testatrix’s financial adviser, rather than her solicitor, for the fact that they were short-changed within her will. It was argued first, that the solicitor could off-load some of his will-making responsibility onto the IFA, by relying without further verification on certain information provided by the IFA, and second, that a cause of action could be pursued by the beneficiaries against the IFA. The court rejected both propositions on the facts of the case, but gave an interesting indication that White v Jones [1995] might not be the only route to a cause of action for frustrated beneficiaries.

John Dickinson and Natasha Dzameh look at the circumstances in which a disposition to an executor constitutes an absolute gift

Practitioners contending with wills and probate matters are fully aware of the distinct difficulties involved in drafting a will which not only ensures that the testator’s estate is disposed of in accordance with their wishes, but is also incapable of being contested. Nonetheless, in recent years it has become increasingly common for individuals to avoid engaging the services of a legal professional for the drafting of such an important document and instead to trust a homemade or internet-inspired document to dispose of their estate. The availability of online templates and general information on will drafting is such that laypersons mistakenly believe that they are capable of drafting a will with the requisite care and skill required to ensure that their estate will pass safely to their intended beneficiaries.

Mark Pawlowski discusses the case law on testamentary trusts for useless or capricious purposes

The notion that a trust may fail because it serves no useful purpose or reflects merely the whim or fancy of the testator seems to fly in the face of testamentary freedom and, in particular, the testator’s right to dispose of their estate in whatever manner they choose, subject only to the court’s control over illegal or immoral conditions and the making of reasonable financial provision for their family and dependants. So how have the courts grappled with these two competing aspects of public policy?