Charles Holbech

February 25, 2012 • Probate, Trusts • 8837

Trusts and Probate claim concerning solicitors

NOTE: This article was published in February 2012 and reflects the law as it stands on the date of publication and not at any later date.

TRUSTS AND PROBATE CLAIM CONCERNING SOLICITORS

Introduction

A solicitor may be involved in the administration of a trust or estate:

(a) in the capacity of a professional trustee or personal representative; and/or

(b) as a solicitor advising the trustees or personal representatives.

In his capacity as trustee or personal representative, the solicitor will owe equitable duties to the beneficiaries of the estate or trust. He may be liable for a breach of trust, or devastavit.

In his capacity as a solicitor advising the trustees/ personal representatives, the solicitor will owe common law duties of care in contract and tort to the trustees/personal representatives and, perhaps, also directly to the beneficiaries.

Some breaches by trustees or personal representatives can be committed entirely innocently or inadvertently, e.g. where the trustees or personal representatives invest in assets in which they have no power to invest. In such a case, the trustees’ intentions and motives are irrelevant; it is also irrelevant whether they have been negligent.

The trustees/personal representatives may, however, have a claim in negligence against a solicitor who carelessly failed to advise them not to make the wrongful investment.

Trustees are also under a duty, under the Trustee Act 2000, and in equity, to exercise reasonable care and skill in their management of trust property. Clearly, they can only be liable, in this respect, if they have been “negligent”. If a solicitor advising them is responsible for their negligence, they may have a claim against the solicitor.

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November 1, 2011 • Trusts • 3113

Claims against trustees following Pitt v Holt

NOTE: This article was published in November 2011 and reflects the law as it stands on the date of publication and not at any later date.

INTRODUCTION

In this talk I want to explore the recent English Court of Appeal decision in a conjoined appeal in two cases: Pitt v Holt and Futter v Futter [2011] 3 WLR 19 in a context where a mistake has been made as to the tax consequences of a transaction.

Both cases involved a reconsideration of the so-called “rule in Hastings-Bass” (based on dicta in Re Hastings-Bass [1975] Ch 25) that the court will interfere with the exercise of a discretion by trustees where it is clear that the trustees would not have acted as they did:

(a) had they not failed to take into account considerations which they ought to have taken into account or

(b) taken into account considerations which they ought not to have taken into account.

The claim was that the trustees (Futter) or a fiduciary (Pitt) had exercised powers in a way that gave rise to unforeseen tax liabilities, and that they would not have so acted if they had taken the true tax position into account. The claims failed, in the Court of Appeal, because the exercise of a discretion by trustees, which is within the terms of the relevant power, cannot be set aside unless the trustees have committed a breach of trust. There can be no breach of trust if (as was the case) the trustees or fiduciary had taken and acted upon appropriate tax advice, even if that advice proved to be wrong.

The decision, if followed in Jersey, may have an impact on claims against trustees.

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May 14, 2011 • Rectification • 6062

Mistake and Rectification
NOTE: This article was published in May 2011 and reflects the law as it stands on the date of publication and not at any later date.

Introduction

Rectification is:
- an equitable, discretionary remedy;
- to correct the wording of a document or instrument;
- by adding, deleting or varying words;
- where by mistake;
- there has been a failure to express the intentions of the parties due to the inadvertent addition or omission of words, or the use of inapposite wording;
- so that the instrument accords with what the parties agreed (in the case of a multi-lateral transaction);
- or with what the donor or settlor intended (in the case of a voluntary, unilateral transaction, such as a settlement).
The justification for intervention is that the mistaken party should not be prejudiced by the operation of an instrument, reliance on which would, without rectification, be unconscionable.

The purpose of rectification is to reformulate instruments in which the parties have mistakenly expressed their intentions, i.e. to correct errors whereby something has been written down wrongly. What is rectified is not a mistake in the transaction itself, but a mistake in the way in which that transaction has been expressed in writing.

Rectification operates retrospectively, even though this involves the validation of acts which would have been invalid under the document in its original form.

Rectification is most commonly sought of contracts. However, it can relate to a wide variety of instruments including:
- contracts;
- conveyances and transfers;
- settlements;
- wills;
- deeds of variation;
- instruments of appointment;
- leases;
- policies of life assurance;
- company registers (but not the articles of association of a company)
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April 19, 2010 • Inheritance Tax • 3870

Negligence and Inheritance Tax Planning

NOTE: This article was published in April 2010 and reflects the law as it stands on the date of publication and not at any later date.

Introduction

A problematical area is whether a professional, giving tax advice to a client in respect of a lifetime transaction, may be liable to the personal representatives or beneficiaries of the client’s estate, in the event that the tax advice is negligent, causing additional tax to be paid in the client’s estate.

There have been three recent cases in this area: Daniels v Thompson [2004] EWCA Civ 307, Rind v Theodore Goddard [2008] PNLR 459 and Vinton v Fladgate Fielder [2010] EWHC (Ch) 904.

In both Daniels v Thompson and Rind v Theodore Goddard the negligence was essentially the same. The client made a lifetime gift in the hope of surviving for 7 years from the date of the gift with the result that the gift itself would be an exempt transfer and the value of the gift would not form part of the donor’s IHT estate on death. The solicitors failed to take any account of the gift with a reservation of benefit provisions in the Finance Act 1986 (Daniels), or failed to structure the gift transaction in such a way as to avoid a reservation of benefit (Rind). Gifted property which is subject to “a reservation of benefit” by the donor on the donor’s death is treated as forming part of the donor’s estate for IHT purposes, whether or not the donor has survived for 7 years from the date of the gift. In both Daniels and Rind, it was alleged that the consequent IHT liability could have been avoided, and there was a claim by the executors (Daniels) or by the residuary beneficiaries (Rind) to recover damages equal to that liability from the solicitors.

In Vinton v Fladgate Fielder the defendant solicitors advised in respect of a lifetime transaction (the allotment of shares in a company to one of its directors (“D”)) on the basis that the allotted shares would attract business property relief in D’s estate. Due to the alleged negligence of the solicitors the shares were allotted in such a way that relief was not available in respect of most of the allotted shares. A claim was made by the executors and beneficiaries of D’s estate to recover the consequent IHT liability, on the basis that such liability could have been avoided if the shares had been allotted in a different way.

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March 2, 2010 • Trusts • 15508

Removal of trustees
NOTE: This article was published in March 2010 and reflects the law as it stands on the date of publication and not at any later date.
1. The aim of this paper is to explore the remedies of beneficiaries and/or trustees, where they wish to remove a trustee or trustees, concentrating on the position where the trustee(s) is or are unwilling to be removed.
2. A trustee may be removed from office against his will:
  1. by the court pursuant to its inherent jurisdiction, even without appointing a new trustee;
  2. by the court appointing a new trustee or trustees in substitution for an existing trustee, when it is expedient to do so, and inexpedient, difficult or impracticable to do so without the assistance of the court: s. 41 of the Trustee Act 1925;
  3. by the persons nominated for the purposes of appointing new trustees appointing a new trustee or trustees in the place of a trustee who remains out of the U.K. for more than 12 months, or refuses or is unfit to act, or is incapable of acting: s. 36 of the Trustee Act 1925;
  4. under an express power of removal in the trust instrument;
  5. by the written direction of all the beneficiaries who (taken together) are of full age and capacity and absolutely entitled to the trust property, where there is no person nominated for the purpose of nominating new trustees: s. 19 of the Trusts of Land and Appointment of Trustees Act 1996;
  6. in place of a mentally incapable trustee, by the written direction of all the beneficiaries who (taken together) are of full age and capacity and absolutely entitled to the trust property, where there is no person who is both entitled and willing and able to appoint a new trustee: s. 20 of the Trusts of Land and Appointment of Trustees Act 1996. Continue Reading
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June 14, 2008 • Probate • 7367

Probate claims – grounds of invalidity

NOTE: This article was published in June 2008 and reflects the law as it stands on the date of publication and not at any later date.

Introduction

The purpose of this paper is to examine the law relating to invalidity of Wills by reference to recent cases on testamentary incapacity, undue influence, want of knowledge and approval, forgery and fraud, due execution and revocation.

Testamentary Incapacity

The Test

The classic test in is that set out in Banks v Goodfellow (1870) LR 5 QB 549, at 565. The testator must:

(a)      understand the nature of his act, i.e. executing the Will, and its effects;

(b)      understand the extent of the property of which he is disposing; and

(c)      must be able to comprehend and appreciate the claims to which he might give effect;

(d)      not be subject to any disorder of the mind as shall “poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties”.

As an added gloss, the testator must have the mental capacity to make decisions which take into account the relevant property, persons and circumstances and arrive at a “rational, fair and just” testament (Abbott v Richardson [2006] WTLR 1567, at 1627). Continue Reading
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« 1 … 3 4 5

Trusts and Probate claim concerning solicitors

NOTE: This article was published in February 2012 and reflects the law as it stands on the date of publication and not at any later date.

Claims against trustees following Pitt v Holt

NOTE: This article was published in November 2011 and reflects the law as it stands on the date of publication and not at any later date.

Mistake and Rectification

NOTE: This article was published in May 2011 and reflects the law as it stands on the date of publication and not at any later date.

Introduction

Negligence and Inheritance Tax Planning

NOTE: This article was published in April 2010 and reflects the law as it stands on the date of publication and not at any later date.

Removal of trustees

NOTE: This article was published in March 2010 and reflects the law as it stands on the date of publication and not at any later date.

Probate claims – grounds of invalidity

NOTE: This article was published in June 2008 and reflects the law as it stands on the date of publication and not at any later date.

Introduction

Testamentary Incapacity

The Test

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