Trust disputes

Court jurisdiction and procedure

Trusts originate in equity and it is therefore unsurprising that actions involving trusts are heard in the Chancery Division of the High Court. However, the county court has jurisdiction up to its limit in amount or value of claim. The parties can also agree, with limitations, that the county court can hear claims above the limit. There are obvious advantages of locality and cost for a county court to hear proceedings, but they are infrequent.

The procedure for dealing with a claim is set out in the Civil Procedure Rules (CPR).

See Practice Note: Trust disputes—court jurisdiction and procedure.

Applications to the court by trustees

Trustees can often run into problems that they need help with beyond the conventional professional assistance. In those circumstances they can apply to the court for guidance. If they follow that guidance, they are entitled to the protection of the court. However, they must appreciate that in making an application the court will only be concerned to look at what is in the best interests of the trust, not the trustees.

In essence, there is no limit on the

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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