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High Court Steps in to Modernise Noble Family’s Dynastic Trusts

Many family trusts are of some antiquity and there is a tendency for their terms to lose touch with the modern world. However, as a case concerning a noble family showed, judges have all the powers required to bring them up to date.

The case concerned a number of trusts arising from a settlement created by a duke in the early 1970s, shortly after he came of age. The highly experienced professional trustees of the settlement took the view that a number of its provisions had become problematic due to changes both in the law and modern relationships – including same-sex marriages – which were unknown at the date of settlement.

Proceedings were launched seeking amendment of those provisions under the Variation of Trusts Act 1958. The proposed variations were supported by all known beneficiaries of the trusts. However, the Court’s approval was required, not least in order to protect the interests of beneficiaries whose identities had not been ascertained or who had yet to be born.

In upholding the duke’s application, the Court noted that the variations would confer more flexible powers on the trustees to administer the trusts effectively for the benefit of current and future members of the family. Extending the duration of the settlement would also avoid a future substantial charge to Inheritance Tax and a deemed disposal of assets that would have resulted in Capital Gains Tax liabilities.

The variations would enable the trustees to accumulate income so that a heritage fund could be established for the maintenance of a family property asset. The Court also agreed that the class of beneficiaries should be extended to embrace same-sex spouses and civil partners of the duke’s children.

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