Defining life insurance trusts A life insurance trust usually involves either: • an assignment of an insurance policy together with a declaration of trust, or • the creation of a trust containing an express assignment of the policy Reasons to consider using a life insurance trust The two main reasons are so that: • the policy proceeds do not form part of the deceased's estate • the proceeds can be obtained ahead of the grant of representation to the life assured's estate Structure Where a trust is created containing an express assignment of the policy, the usual structure is: • the insurance policy is assigned to a trust • the terms on which the trustees are to hold the trust property are set out • the trustees are given overriding powers • there is an ultimate trust Assignment A suitable clause assigning the insurance policy is, for example: '2 Assignment The Settlor as beneficial owner now assigns the Policy and all benefits and advantages of and all rights arising under and

The nature of a life interest trust In its basic form the life tenant is entitled to income produced by the trust fund or to the use of trust assets. The life tenant is not entitled to capital held for the beneficiaries in remainder on the termination of the life interest. Put very simply, income is payable to A for life and on A's death B receives the capital. The beneficiaries may be named within the clause or defined terms may be used. The term 'interest in possession' has been considered to include: • life interest trusts • any trusts under which a beneficiary has an immediate right to income as it arises Reasons to consider using a life interest trust The motive for creating a life interest trust is usually the desire to: • protect the capital, • ensure that it devolves on A's death to B • provide an income to a beneficiary eg because they are a spendthrift It is common to give added flexibility by enabling the trustees to

The nature of a marriage trust A marriage trust is a trust made in consideration of marriage either: • before the marriage or • after the marriage if made in pursuance of a pre-nuptial agreement to settle When to consider using a marriage trust Marriage has traditionally been an occasion for the making of a trust. Generally, the parties to the marriage themselves come to an understanding as to what should be settled before instructing their advisers. Today, usually only one party is settling property. Preliminary considerations Consider: • the property to be settled on either side • the beneficial trusts • whether after-acquired property is to be settled • whether there is to be power to withdraw property from the trust and to what extent • who will pay the costs of preparing the trust Recitals These explain the background and purpose of the trust and are traditionally introduced by the word 'whereas', for example: 'WHEREAS (1) A marriage ("the Marriage") is intended shortly to be solemnised between the Settlor and

Common misconceptions There are a number of common misconceptions concerning the standard opening words used in trust deeds, for instance: • it is not necessary for the trustees to be parties to the deed of trust—the main advantage of including them is that by executing the deed they accept the trusteeship and become familiar with the terms of the trust (note that once the trusteeship is accepted it cannot be disclaimed, but a trustee can retire) • although it is desirable for a date to be inserted, absence of a date does not affect validity of the trust—a trust only comes into effect (whatever date may be inserted) when the trustees are holding property in accordance with its terms • offshore trusts may involve a protector, the appointment of which is designed to enable some control to be exercised in relation to overseas trustees; the protector may be (but does not have to be) a party to the trust deed Date and opening words Usually the date on which the trust was made

Sufficient funds To determine whether or not the settlor will be left with sufficient means to provide for themselves after creating a trust, the solicitor advising them should take into account the: • nature and value of the property to be settled • nature and value of property left remaining to the settlor • income likely to be produced from the settlor's remaining property To this end you may wish to ask the settlor to complete an assets and liabilities questionnaire that asks for details of their assets and liabilities, including values and whether assets are jointly owned. When the settlor is considering creating a trust, tax is often not their primary consideration. However, it is important that the tax consequences of the trust are understood. See Practice Note: Introductory guide to the taxation of trusts. Drafting lifetime trusts The trust needs some property to be the subject-matter of the trusts from the outset. The settlor may add to the original trust property from time to time and other people may also transfer

Protective trusts are a long-established method of making provision for beneficiaries who are in need of protection. Typically, they have been used where a beneficiary is financially irresponsible or whose spouse or civil partner is financially irresponsible. Under a protective trust, the principal beneficiary has an interest in possession which is determinable on the occurrence of certain events, such as the bankruptcy of the principal beneficiary or alienation by the principal beneficiary attempting to sell the life interest for a lump sum. When a specified event occurs, the interest in possession determines and a discretionary trust arises. Normally, the beneficiaries of the discretionary trust arising are the principal beneficiary, his spouse, children and remoter issue. The use of express protective trusts became so common with some of the clauses providing for protected life interests so long that they were incorporated into statute. Section 33 of the Trustee Act 1925 (TA 1925) is the modern statute that contains the relevant provisions and practitioners can create a protective trust simply by employing the short-form expression: 'the

The Solicitors Regulation Authority The Solicitors Regulation Authority (SRA) Standards and Regulations contain two Codes of Conduct—a Code for individuals and a Code for firms. See Practice Note: SRA Codes of Conduct for individuals and firms for guidance on the SRA Codes of Conduct (available subject to subscription). Preliminary checks The SRA Codes and the Money Laundering Regulations require preliminary checks on prospective new clients. See the following Practice Notes from Compliance for trusts—overview for specific guidance in relation to trustees and trust compliance: • Money Laundering Regulations 2017—impact on trustees • Trusts—disclosure of beneficial ownership information via the Trust Registration Service (TRS) and record-keeping • Trust Registration Service (TRS) • Beneficial ownership registers—private clients and trusts The first client meeting The Law Society’s Practice Note Engaging clients provides that the main areas to cover include: • the client’s objectives • your role • your advice • the costs of the retainer The client’s objectives for setting up a trust The trust must achieve the client’s objectives. Examples

Appointment of original trustees The trustees must be clearly identified in the trust deed. For example: ‘THIS SETTLEMENT is made the....... day of......... BETWEEN: (1) (settlor) of (address) (‘the Settlor’) and (2) (original trustees) of (addresses) (‘the Original Trustees’).’ Acceptance of office A person appointed a trustee assumes office on acceptance. Acceptance of office may be either express, eg by executing the trust instrument or implied, eg by personally interfering with the trust property. Once appointed, trustees are in a fiduciary position and so must act with good faith. The trustee's duty is to administer the trust for the benefit of its beneficiaries. Who can act as trustee Every person, male or female, married or unmarried, human or corporate, who has the power to hold and dispose of any legal or equitable estate or interest in assets can create a trust and be a trustee. Note, however, that this is subject to a number of restrictions. Minors The appointment of an infant to be a trustee in relation to any settlement or trust is void. Aliens Unless

The Creative Industries Policy and Evidence Centre (Creative PEC) has published comprehensive research outlining significant shifts in migration patterns within the UK's creative sector since 2021. The report reveals a striking 70% increase in temporary visas for creative roles—contrasted with a 13.5% rise for non-creative occupations—while longer-term Worker visas for creative roles grew by 8% compared to 233% for non-creative positions.

The Society of Authors has announced that it joined the Creative Rights in AI Coalition, a coalition of rights holders, including publishers, authors, artists and music producers, which calls on the government to encourage growth in the creative and tech sectors by protecting copyright. The Creative Rights in AI Coalition has published three key principles for copyright and generative AI policy, which focus on a dynamic licensing market, control and transparency for content creators, and driving growth and innovation in the creative and tech sectors, alongside a statement urging the government to adopt these principles as a framework for developing AI policy.

Restructuring & Insolvency analysis: Liquidators of a public limited company, Torotrak plc (the company), had made distributions to creditors in full and were now faced with a limited surplus and over 8,500 members, many of whom were individuals, residing around the globe. How could the court balance issues of proportionality, fairness and the restrictive wording of section 107 of the Insolvency Act 1986 (IA 1986)? Could the liquidators limit a distribution to the top 81 shareholders, ensuring any dividend was meaningful or apply the procedure for proofs of debt by creditors to all members, ensuring any dividend was fair? What were the practical steps to be taken by the liquidators to trace and engage with members? The court made pragmatic directions, as to tracing members and inviting claims by members by a cut-off date, gave the liquidators relief from any liability under section 1157 of the Companies Act 2006 (CA 2006) and increased their remuneration cap in respect of the distribution of the surplus. Written by Lisa Linklater KC (leading counsel for the liquidators at the hearing before His Honour Judge Hodge KC, sitting as a High Court judge) and Joel Finnan, Exchange Chambers.

Personal Injury analysis: Dan Wood, barrister at Ropewalk Chambers and Peter Ward, associate at DAC Beachcroft Claims Ltd, discuss the practical implications of the judgment in Molodi v Cambridge Vibration Maintenance Service, concerning a finding of fundamental dishonesty made against the claimant owing to numerous inconsistencies and inaccuracies in his personal injury claim.