Representation of R M Talbot Estate: application by a trustee to vary a will of Jersey situate…

Representation of R M Talbot Estate: application by a trustee to vary a will of Jersey situate personal estate

Facts

In the matter of the Representation of R M Talbot Estate [2010]JRC204, the trustee of a settlement established by the deceased brought an application to vary her will under Article 25(1) of the Probate (Jersey) Law 1998 (the “Law”). The deceased had left the residue of her personal estate in Jersey to the trustee. By a letter of wishes, the deceased had expressed the wish, subject to certain conditions (which had been met) and to certain cash distributions, that the trustee hold the trust assets for a named individual. The trustee had received tax advice that distributions from the trust would give rise to adverse tax consequences for the (largely) UK resident and domiciled beneficiaries. The alternative was to vary the Jersey will such that the distributions were made from the will, rather than from the trust, which would not give rise to any UK tax liability. The trustee, with the consent of the protector, exercised its power of appointment under the trust to confer upon it a specific power to enter into a deed of variation and to apply to the Royal Court to vary a will. The trustee thought it prudent, particularly given the international nature of the trust assets, to apply to the Royal Court to vary the Jersey will, firstly to make cash distributions to certain beneficiaries and then to give the residue of the estate to the named individual.

Held

An application for variation under the Law must be made within two years of the death of a deceased person and the application was made well within this period. Further, the Court may order a variation under the Law with the consent of all parties who, in its opinion, should be consulted and having regard only to the interests of the beneficiaries or heirs interested in so much of the estate as is affected by the order. The trustee had obtained the written consent of the adult beneficiaries of the trust. Counsel for the minor beneficiaries and remoter issue also consented, as did the protector and the executor, who rested on the wisdom of the Court. The trustee was effectively disclaiming, on behalf of the trust, its interest in the estate, whereas if the assets had devolved into the trust, they would in all likelihood have been distributed to the relevant beneficiaries, with adverse tax consequences for those beneficiaries. It was in the interests of the beneficiaries to receive such benefits from the will, rather than the trust and the interests of those beneficiaries not benefiting from the variation were not adversely affected.

Further, the trustee was not seeking directions under Article 51 of the Trusts (Jersey) Law 1984 as to whether it should make the application for variation of the will, as the purpose of applying for directions is to protect the trustee from the beneficiaries and such protection was not necessary in this case, given that the interests of the beneficiaries would not be adversely affected. The trustee also wished to avoid incurring the expense of two separate applications.
The Court was satisfied that the necessary parties had been consulted and had consented and that it was in the interests of the trust estate for the trustee to consent; accordingly, pursuant to Article 25(1) of the Law, the Court varied the will as requested and ordered that the variation have effect as if it were a disposition effected under the will.

Comment

This is an interesting example of a case where the Court agreed to vary a will leaving Jersey situs personal estate to the trustees of a trust, in order to avoid adverse tax consequences to the beneficiaries which would have been incurred if, as was likely, distributions were made from the trust to those beneficiaries. Note that in this case, the trustee, prior to making the application, exercised its power of appointment with protector consent to confer upon it an express power to enter into a deed of variation of a will and to make an application to the Court to vary a will.

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This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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