Many family trusts are of some antiquity and there is a tendency for their terms to lose touch with the modern world. However, a recent case concerning a noble family showed that judges have substantial powers to bring them up to date.
This case concerned the trusts arising from a settlement created by a duke in 1971. Several provisions of the settlement had become problematic due to changes both in the law and modern relationships which were not anticipated at the date of the settlement.
Proceedings were launched under the Variation of Trusts Act 1958 seeking to enlarge the trustees’ administrative powers, widen the class of beneficiaries to include same-sex spouses and civil partners and to disapply the Settled Land Act 1925, the legislation under which the trusts had been established. The proposed variations were supported by all known beneficiaries of the trusts. However, the Court’s approval was required to protect the interests of beneficiaries whose identities had not been ascertained or who were yet to be born.
In upholding the Duke’s application, amongst other things, the Court noted that the variations would confer more flexible powers on the trustees to administer the trusts effectively for the benefit of current and future members of the family. The Court also agreed that the class of beneficiaries should be extended to embrace same-sex spouses and civil partners of the duke’s children and remoter issue and also to include the issue of civil partnerships and same–sex marriages. The duration of the settlement was extended so that substantial charges to Inheritance Tax and Capital Gains Tax could be avoided or at least postponed. The Court approved the variation of the terms of the settlement to make clear that it is no longer to be governed by the Settled Land Act 1925. The approval of these variations is indicative of the Court’s recognition of the need to amend provisions which have become dated due to changes in legislation and social norms.
For help or advice on this topic or other Wills, Trusts or Probate related matters, please speak to the Private Client Team on 0808 166 8870
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