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In the matter of the B Life Interest Settlement [2012] JRC 229

February 2013 - Finance. Legal Developments by Ogier .

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Facts - This was an application by a Trustee asking the Royal Court to exercise its powers to set aside a Deed of Amendment, a Deed of Exclusion and a Deed of Appointment by reason of mistake and/or seeking relief under the Hastings Bass principle. Thiswas in effect the first opportunity the Court in Jersey had had to consider the Hastings Bass remedy since the Court of Appeal in England's decision in Pitt v Holt and Futter v Futter. The Bailiff had directed that in the instant case an amicus be appointedto argue before the Royal Court on the Hastings Bass issue.

The settlement was governed by Jersey law. It was a life interest trust for the settlor and thereafter his spouse. The settlor's two sons would ultimately benefit. The deeds in question were part of a tax planning undertaken by the Trustee. The intended effect was to transfer life interests in two thirds of the Trust to the settlor's sons, free of the life interest held by the settlor and his spouse, thus creating new transitional interests under relevant UK tax legislation. The re-structuring would reduce the value of the settlor's estate for the purposes of inheritance tax, but that would only be fully effective if the settlor lived for a period of seven years from the date of the restructuring.

Unfortunately the settlor did not survive seven years. Shortly after the deeds were executed in April 2008, the settlor was diagnosed with an aggressive and ultimately fatal form of Alzheimer's disease. The settlor died in September 2011. The mistake, claimed the Trustee, was in believing the settlor to be fit and healthy at the time of executing the deeds. If it had known of his condition, it would not have put in the place the planning.

http://www.ogier.com/Publication%20Library/In_the_matter_of_the_B_Life_Interest_Settlement_2012_JRC_229.pdf

 

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