The following Private Client guidance note Produced in partnership with Katharina A. Byrne provides comprehensive and up to date legal information covering:
When a trustee makes a mistake, it is important to remember that there are a few remedies available: rectification, the doctrine of mistake and the so-called rule in Hastings-Bass (Rule). This Practice Note examines the Rule under which the court has set aside decisions of trustees of family trusts on the basis that the trustee's decision-making process was flawed in a material respect. For information on rectification and mistake, see Practice Notes: Rectification and Trust disputes—construction, rectification and mistake.
Many cases that have invoked the Rule involved occupational pension schemes. For information on the development of the Rule specifically in pension cases, see Practice Note: Unwinding pension trustee decisions due to mistake—Hastings-Bass and Pitt v Holt (subject to subscription).
In Hastings-Bass v Inland Revenue Commissioners (Re Hastings-Bass (Deceased)) the trustees of a settlement (the 1947 settlement) exercised a power of advancement to transfer funds to another settlement (the 1957 settlement). Their aim was to reduce the amount of estate duty that would be payable on the death of the life tenant of the 1947 settlement. Subsequently, it became clear that in making the transfer, the trustees of the 1947 settlement had infringed the rule against perpetuities (see Practice Note: Perpetuities and accumulations). When the life tenant of the 1947 settlement died, the Inland Revenue argued that the
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