Q&As

The trustees of a discretionary ‘nil rate band trust’ created by a Will have transferred the legal title to the spouse of the testator, in exercise of the trustees’ power of appointment. Can the trustees now say that the transfer was made in consideration of a debt created by the spouse in favour of the trustees?

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Published on LexisPSL on 08/08/2019

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • The trustees of a discretionary ‘nil rate band trust’ created by a Will have transferred the legal title to the spouse of the testator, in exercise of the trustees’ power of appointment. Can the trustees now say that the transfer was made in consideration of a debt created by the spouse in favour of the trustees?

The trustees of a discretionary ‘nil rate band trust’ created by a Will have transferred the legal title to the spouse of the testator, in exercise of the trustees’ power of appointment. Can the trustees now say that the transfer was made in consideration of a debt created by the spouse in favour of the trustees?

If the trustees have exercised their power in accordance with any requirements set out in the trust instrument, for example that it must be effected by means of a deed, it is difficult to see how the transfer of the property can now be reclassified as a sale (a transfer for consideration), unless the trustees obtain a court order for rectification, setting aside the transfer under the doctrine of mistake or setting it aside under the rule in Hastings-Bass.

For further information, see Practice Notes: Unwinding trustee decisions—the rule in Hastings-Bass following Pitt v Holt and Trust disputes—construction, rectification and mistake.

If the trustees did not properly comply with the requirements of the trust instrument or other legal

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