We are delighted to announce John has made the national press on one of his matters; Below is a case summary written by Mr Franklin together with the links to the relevant article :
The case involved a life insurance settlement for £100,000 created in 2011 and as is such it did not form part of the estate of the settlor who passed away from Covid 19 in 2020. At the time of his death, the settlor had been married to the claimant for just over a year who was his third wife. He had separated from his second wife in or around 2012 with whom he had no children. He had adult children from his first marriage. The settlor had executed a will in September 2019 naming the claimant as his executrix and beneficiary. The policy created a discretionary trust with the settlor and his additional nominee as specified in the trust deed having a power of appointment. It specified the class of potential beneficiaries which included the settlor’s spouse, children, and grandchildren. It also allowed a default beneficiary to be nominated, which at the time of executing the deed the settlor had chosen to be his second wife. Despite their separation, and the resolution of their financial obligations to each other in the family court having resulted in a clean break in 2016, the settlor had not amended his life insurance trust. In fact, his second wife had specifically asked that the settlor remove himself as trustee and default beneficiary of her mirror policy in 2018 and not only had the settlor agreed, but he had made clear that he wished to remove her as his trustee and beneficiary of the policy in dispute. Unfortunately, at the time of his unexpected death he had not fully followed through on that course of action although preliminary steps had been taken. In the meantime, his marriage to the claimant had placed her within the class of potential beneficiaries.
Following the settlor’s death, the defendant made clear that she considered she was entitled to exercise the power of appointment that she retained in favour herself, and that so long as she considered the competing claims of all beneficiaries she could retain the money with impunity.
There were a few interesting aspects to this case. First, how to overcome a situation whereby a trustee was acting with flagrant unabashed self-interest. Clearly there had to be an application to remove and replace her as trustee. However, there was a choice for the claimant as to whether to bring the claim under s. 41 of the Trustees Act 1925 where the court may be reluctant to remove a trustee who opposed being removed, or under the court’s inherent jurisdiction and the latter was opted for. The focus of the court when considering an application when the court’s inherent jurisdiction is invoked is the welfare of the beneficiaries and to ensure then security of the trust property, and efficient and satisfactory execution of the trusts and a faithful sound exercise of the powers conferred on the trustee. . Given that the trust is discretionary, the essential question however, was whether the due and proper administration of the trust was opposed to the trustee remaining in office. In respect, regard must be had to the interest of all potential beneficiaries.
At the first hearing of the matter in the High Court, the Master gave a clear indication that the defendant was not likely to be able to give due regard to all the interest of all potential beneficiaries and that there was a clear conflict of interests. Notwithstanding the indication, the defendant maintained her position and a disposal hearing was listed on 17 February 2022. The defendant was given permission to identify two potential trustees. Shortly before the hearing in January 2022, the defendant communicated that she no longer wished to be a trustee but insisted that her two preferred replacements should be chosen by the court.
Ultimately the court decided that one of the claimant’s chosen trustees, the settlor’s son, and that one of the defendant’s, an acquaintance of the settlor, should be nominated. It remains to be seen how the trustees will exercise their discretion.
For the press article please click on the below links
