Unit 6 Wills

Question 1

Remedies Against Third Parties

Which claims should a B bring against a 3rd party who has received property in breach of trust/fiduciary duty when they:
(a) are financially solvent and own property with value/interest?
(b) are financially solvent but don’t own property of value/interest?
(c) own property of value/interest but are not financially solvent?

Which claims should a B bring against a 3rd party who has received property in breach of trust/fiduciary duty where the 3rd party assisted with the breach of trust/fiduciary duty?

Answer 1

(a) personal + proprietary claim
(b) personal recipient claim
(c)proprietary recipient claim

Accessory liability (dishonest assistance).

Question 2

Remedies Against Third Parties

Who will be liable for intermeddling?

Liability?

Answer 2

A third party who is not expressly appointed as a trustee, but takes it upon themselves to act as if they were, will be held personally liable for any losses caused by their actions as if they were an expressly appointed trustee.

Question 3

Remedies Against Third Parties

What are the elements of knowing receipt?

When will the claim succeed?

Will a third party be liable for knowing receipt if they became aware after disposal of the property?

When will it be unconscionable for a third party to retain and deal with trust property?

Answer 3

• The third party has received property in breach of trust/fiduciary duty;
• the third party has received that property for their own benefit; and
• while in receipt of the property, the third party has such knowledge that makes it unconscionable for them to retain or deal with the property as if it were their own.

Will only succeed if the 3rd party had the requisite degree of knowledge whilst in receipt of the trust property.

No.

Would be unconscionable where one of the following applies:
- the third party knows that the property belongs to a trust;
- the third party wilfully shuts their eyes to the obvious
- the third party deliberately decides not to ask any questions notwithstanding they have their suspicions about the origins of the property.

Question 4

Remedies Against Third Parties

Can proprietary claims for trust property (or replacement) be brought against the following parties:
(a) bona fide purchaser?
(b) wrongdoing recipient?
(c) innocent volunteer?

Answer 4

(a) No - neither a proprietary claim or personal claim in knowing receipt would succeed.
(b) can bring a proprietary claim against them to recover property - harsher tracing rules apply (everything presumed against wrongdoer - see tracing rules previous unit).
(c) if they have no knowledge or notice of the breach of trust and provided no consideration for the transfer of property, a proprietary claim can still be brought - kinder tracing rules apply.

Question 5

Remedies Against Third Parties

How do the innocent tracing rules apply in the following situations:
(a) If the third party still holds trust property in its original form?
(b) If third party has used trust property to buy something new?
(c) If the third party has taken trust funds and mixed this with their own money to purchase property in their own name?
(d) If third party has taken trust funds and paid this into their own bank account mixing it with money of their own?

For (d), how does this differ from wrongdoing tracing?

What if the innocent 3rd party receives trust money and uses it to improve buildings they already own?

Answer 5

• B’s can assert a proprietary claim against property to recover.
• B’s can assert a proprietary claim against new property (clean substitution).
• B’s can asset proprietary claim against mixed asset. Will be proportionate.
• B’s will use tracing rules of Clayton’s case and Barlow Clowes v Vaughan to determine into what forms of the property they can trace.

For (d), Re Hallet and Re Oatway would apply instead.

The B will not be able to trace any interest into that improvement.

Question 6

Remedies Against Third Parties

What are the elements of a claim for dishonest assistance?

What is required to prove breach of trust/fiduciary duty?

What kind of assistance must the third party provide?

What does the test for dishonesty require?

Answer 6

• there must have been a breach of trust/fiduciary duty;
• the third party must have assisted in that breach; and
• the third party must have acted dishonestly.

A breach of trust/fiduciary duty irrespective of how committed - not necessary to establish that the trustee has acted dishonestly or intentionally in breaching the trust.

The assistance provided must be some kind of positive act.

Test for dishonesty requires the court to ask whether the ordinary person (imbued with the same experience and intelligence as the actual defendant) would have acted differently knowing what the actual defendant knew.

Question 7

Family Provision and Post-Death Variations

What are the categories of applicant under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 7

• The spouse/CP of the deceased;
• a former spouse/CP of the deceased who has not remarried (except where the court made an order barring them from making a claim);
• a child of the deceased;
• any person treated by the deceased as a child of the family in relation to any marriage or CP of the deceased, or otherwise in relation to any family in which the deceased at any time stood in the role of parent;
• any person who, immediately before the death of the deceased, was being maintained by the deceased either wholly or in part;
• any person who, during the whole of the period of 2 yrs ending immediately before the date when the deceased died, was living: in the same household as the deceased, and as the husband/wife/CP of the deceased.

Question 8

Family Provision and Post-Death Variations

When is a claim under the IFPDA 1975 by a child of the deceased likely to fail?

Answer 8

If the adult child is in employment and likely to have earning capacity for the foreseeable future, it is unlikely that their application will succeed without some special circumstances such as:
- a moral obligation owed by the deceased;
- the adult child having a disability;
- the adult child working for the deceased for many years for a low wage; or
- the child making sacrifices in order to care for the deceased.

Question 9

Family Provision and Post-Death Variations

When is a person ‘maintained’ for the purposes of the IFPDA 1975?

Answer 9

If the deceased was making ‘a substantial contribution in money or money’s worth towards the reasonable needs of the applicant otherwise than for full valuable consideration pursuant to an arrangement of a commercial nature’.

Question 10

Family Provision and Post-Death Variations

When must an application under the IFPDA 1975 be made?

Answer 10

Must be made within 6 months from the date of the grant of representation.

Can also be made before the grant is issued.

Question 11

Family Provision and Post-Death Variations

What is the only ground for applications under the IFPDA 1975?

What are the 2 standards for judging?
Meaning of maintenance?

Limitation to maintenance?

Answer 11

The only ground for a claim is that ‘the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or a combination, is not such as to make reasonable financial provision for the applicant.

Two standards for judging reasonable financial provision:
- the surviving spouse standard - allows a surviving spouse/CP such financial provision as is reasonable in all the circumstances, whether or not that provision is required for their maintenance. (relevant factor - how much the spouse/CP might have expected on a divorce).
- ordinary standard - applies to all other categories of applicant - allows such financial provision as it would be reasonable in all the circumstances for the applicant to receive for his maintenance.
Maintenance - payments which enable the applicant to discharge the cost of their daily living at whichever standard of living is appropriate to them. (therefore addresses payments required to meet recurring expenses).

Limitation to maintenance in the ordinary standard - a person who is able to pay for their living expenses out of their own resources will not obtain an award.

Question 12

Family Provision and Post-Death Variations

Can a B who is criminally liable for the testator’s death bring a claim for family provision?

Answer 12

Yes. Their entitlement under the will is forfeit. However, they can still bring a claim for family provision.

Question 13

Family Provision and Post-Death Variations

What is disclaimer?

How do disclaimed assets pass?

Answer 13

Amounts to a rejection of the assets inherited under the will or the intestacy law or by survivorship.

The disclaimed asset then passes as though the original beneficiary had predeceased.

Question 14

Family Provision and Post-Death Variations

How can a post-death variation be made?

What must an original beneficiary possess to effect variation?

What if they are not legally capable of effecting the variation under these conditions?

What are the conditions for a variation to be read back into the will for IHT purposes?

Answer 14

A beneficiary who varies a benefit can direct where benefit is to go and on what terms.

Must be aged 18 or more and have mental capacity.

If not legally capable of effecting the variation, an application can be made to the court.
The court has the power to consent for infants and people who lack capacity and cannot consent for themselves, provided the variation is for their benefit.

The conditions are that the disclaimer/variation:
- is in writing and signed by the original beneficiary;
- is within 2 yrs of the deceased’s death; and
- is not made for a consideration in money/money’s worth.
Must also state that s142 IHTA 1984 is to apply.