Trust v Estate

[exec13]

My elder sister (sister A) recently passed away and left a will of which I am one of the executors.

Her home (a park home) was put into a Discretionary Trust some years ago and my other sister (sister B) was the other Trustee.

I have recently completed Probate and IHT forms and awaiting the go ahead.

Sister B was left as the only remaining Trustee. She has been to see a solicitor to help her with handling the Trust who has told her she cannot sell the home as a single Trustee she needs to appoint another, who everyone says it should really be me, however I am still waiting to hear who she may appoint. We have spoken on qiute a few occasions and she seems very guarded and not very forthcoming with how things are progressing. I have no intention of asking as I feel she is using this somehow as leverage for whatever reason. I feel she may not follow sister A wishes as per a note/letter of wishes, (printed by the solicitor who did the will and signed by sister A, not classed as a codicil I am told) left as an addition to the will as to where the proceeds of the sale of the home should go to. The Trust document states that the proceeds should go to all nieces and nephews, whereas the note/addition to the will names just specific nieces and nephews.

My questions are;

a - what recourse (if any) would I have if sister B should decide to sell the home and not carry out the last wishes of sister A

b – Would it be illegal for sister B not to have the funds from the sale transfered to the estate account.

c – Do I have any rights regarding the contents of the home (there is not anything of any great value)

d – I am also named as power of attorney which I have not invoked as I dont see it to be necessary only if it would help with the above situation ie. To make sure sister A wishes would be carried out.

Having said all of the above everything may well as yet all be ok(as per Sister A wishes), I just wanted some advice to be prepared should things not work out as she wanted.

Regards exec13

[2222]

a - what recourse (if any) would I have if sister B should decide to sell the home and not carry out the last wishes of sister A

The home was held in a discretionary trust, you say. Your sister is now the sole trustee. She has to follow the terms of that trust, but you have not told us what it says. It may say that the trustee should have regard to a letter of wishes, or it may not say anything at all. Do you have a copy?

I have a vague recollection that a sole trustee cannot exercise discretion - that takes at least 2.



b – Would it be illegal for sister B not to have the funds from the sale transfered to the estate account.

Almost certainly it would be wrong to transfer the trust assets to the estate, but it depends again what the trust says.



c – Do I have any rights regarding the contents of the home (there is not anything of any great value)

You are executor of the estate. So, assuming the contents were not in the trust, they all come under your jurisdiction as executor.



d – I am also named as power of attorney which I have not invoked as I dont see it to be necessary only if it would help with the above situation ie. To make sure sister A wishes would be carried out.

The POA is no longer of any relevance.

[exec13]

Hi, and thank you for the reply. In my first post I did say that the trust says that the proceeds of the sale should be divided between surviving nephews and nieces, of which there are a few, however in a letter of wishes with the will it names just 3 nephews and nieces.
Yes I think there must be 2 trustee`s.
I have now found that I as executor should deal with the contents.
I have also been told that as a leasehold property the trust cannot apply ?
exec2

[exec13]

Well i was hoping for a little more help here !!! however if i could add another question.
Who in this situation would be responsible for the ongoing utility bills and ground rent, the estate or the trust, any help would be appreciated.

[exec13]

Hi again for future reference of anyone in a similar situation I am to understand that it is the trust responsible for the ongoing bills of the property and not the estate. I would still like to establish whether it would be worth pursuing the trust should the trustees not comply with the letter of wishes.

[Amethyst]

Peridot

I'm just tagging someone to look in for you tomorrow - apologies for having missed your post previously xxx

[Peridot]

Hi Exec13,

Was the discretionary trust set up in the Will or entered into before her death? Are there specifically named trustees for the discretionary trust? If not then the executors would become trustees. If the discretionary trust is set up by the Will the property effectively drops into the trust. Was anything other than the property to go into the trust? What are your plans for the property is it to be sold and the trust wound up? Are you going to use the trust at all as a vehicle to hold the property?

The issue you have, if you establish the property can be held in the discretionary trust is the fact the trust is discretionary. The trustees (of which you would need 2 to deal with property transfer/sale) have discretion to deal with the trust as they see fit. The letter or expression of wishes is purely to provide information on what the testator (sister A) would like to happen to the trust property. It is not legally binding although there are moral issues to deal with should the trustees go against her expression of wishes. So morally your sister A wanted the property to be divided between the three named according to the expression of wishes.

You will also need to establish the terms of the lease for the park home. There are particular selling criteria to meet and the park homes site owners will also be due a percentage of any sale costs. This would be set out in the lease.

Hopefully this helps a bit. Has your solicitor moved any further forward yet?

[exec13]

Hi, many thanks for your reply, firstly the trust was initially set up in 2011 and also a will, the trust and the will left everything to be divided between all nephews and nieces. The trust and will are seperate.

The trustees were sister A the testator (now passed away), and sister B, sister B is seeing a solicitor and has now appointed another trustee (her friend). Just the property is in the trust.

I beleive that the property will be sold, and as you say the park owners will be due a percentage.

I did visit sister B a short while ago and asked what were their (the trustees) intentions regarding the proceeds of the sale, the answer I had was that they had not decided yet.

Sister A had a new will (and the letters-of-wishes) drawn up a few weeks before she passed away not naming any other nephews and nieces other than the 3 mentioned in the letter of wishes, as residuary beneficiaries.

I have advised the 3 to send a letter to the trustees requesting what their intentions would be with the proceeds of the sale and for them (the trustees) to reply within 14 days and that they would be willing to pursue the matter as per the morally correct path of the letter-of-wishes.

Just to confirm my only role has been executor to the will, and unqualified adviser to the 2 nephews and 1 niece.

A solicitor has not yet been appointed as I think it best if it can possibly be resolved amicably.

Would you have any knowledge of any previous situations/presidents that may cover this situation.

Would you know what would be the best way to challenge the trustees legally on the moral issue should that become necessary

Exec 13

[Peridot]

Hi Exec13,
Ok so the trust is a stand alone from the Will having been created separately and previous to your sister's death. In that case as it is a discretionary trust as I mentioned above although there is a letter of wishes how the trust is dealt with ultimately it is up to the trustees to use their discretion. Although there is a strong moral obligation to follow your other sister's wishes there is no legal obligation so there is no legal recourse.
The trustees would be expected to demonstrate they have managed the trust appropriately but again it is at their discretion and would be difficult to question unless there is clear evidence they have mismanaged the trust.
The property is outside the estate, as from what you appear to indicate the discretionary trust was set up and used before the death of your sister. What, if any, further trust was set up in the Will?

[exec13]

Thank you Peridot, yes the trust was set up in 2011. On reading the will again I don`t think there was any further trust set up within the will.

However reading a copy of the trust document the first clause says;




Part 1 – OPERATIVE PROVISIONS

1 – Definitions and construction

1. 1. – In this trust
      
      The beneficiaries means

1. 1. 1. The Settlor
      2. The nephews and nieces of the settlor and their issue and further issue.
         
         (iii) Any person notified in writing by the settlor during the settlors lifetime to the trustee`s

I wondered if item (iii) would have any significance and may give the letter-of-wishes more standing in terms of the trust.

[Peridot]

Hi again,
It is difficult to say without seeing the whole wording of the trust. The issue is the discretionary part of the trust. It may be (iii) could hold some sway but ultimately if the trust is discretionary it is up to the trustees.
Some face to face legal advice may be helpful if you are able to take a copy of the trust document, expression of wishes and the Will with you they may be able to clarify things for you. Many law firms will do a fixed, reduced fee or even free initial appointment to discuss options.

[exec13]

I would like to resurect this please and to go over the "letter of wishes".

This was dictated to the solicitor and secretary at the same time as the will by my deceased sister. It was then typed up by them, taken back to her, with the new will, and signed by my sister, which must have been in the presence of the solicitor and secretary. The copy of this was given to me with the will when I called to collect them from the solicitors. It is a type written document on plain A4 paper with no heading or other description.

My question is, could this be classed as a codicil and not a letter-of-wishes as it was drawn up and witnessed, but not signed, by the solicitor, who if called upon possibly in a courtroom would have to verify this.

[Peridot]

Hi exec13,
In my opinion this would be classed as a letter wishes. There are very strict rules for executing a Will or Codicil. The fact the letter of wishes has been prepared by the solicitor is irrelevant. The fact it was witnessed by someone is irrelevant it still doesn’t constitute execution of a codicil. I suspect the Solicitor would not be willing to say he believed he was witnessing a codicil as that does not appear to the intention of your sister and if it was and she had voiced that the solicitor, I believe the solicitor would not have drafted the document he did and he would have executed it differently. Unless you have evidence to the contrary such as an attendance note on the file confirming her intention was to create a codicil, I suspect you would have little success pursuing this line.
If you have any physical evidence to show her intentions it would be advisable to get some face to face advice from a contested probate specialist.

[exec13]

Many thanks Peridot, all of youre advice has been greatly appreciated and I feel now that I have hopefuly done everything I possibly can to see that my deceased sisters wishes are carried out, and my conscience is clear. I will post again maybe when everything is concluded just to let you know the outcome and for any future solutions to problems for others.