Interpreting Will Trust Clauses

Monty314

Dear All, I am a newbie so excuse any ignorance or lack of knowledge. I wanted to understand the following clause in plain language and meaning:-

"...hold my residuary estate upon the trusts following that is to say:- To divide the same into three equal shares and to hold two such equal shares in trust for such of my children as shall survive me and attain the age of twenty-five years and if more than one in equal shares absolutely and to hold the remaining such equal share in trust for my wife absolutely and subject thereto upon the trusts hereinbefore set forth for the other two such equal shares."

Does this mean the wife's one share is subject to the childrens' two shares, but the childrens' two shares are not subject to the wife's share?

I understand that each child's share can increase equally within their two shares, but the wife's share cannot increase in tandem with the increase of the children's shares (only the children's individual shares can increase in a unilateral manner inside their two shares).

What exactly is "..subject thereto upon the trusts..." mean or intending to establish with between the wife's share and the childrens' shares?

I understand that the childrens' individual shares can be increased from the wife's one share, but as the childrens' trusts and shares are not 'subject thereto upon' the wife's trust and share, then the wife's share cannot be increased from the childrens' trusts and shares.

In conclusion, the children can have an accrual from the wife's share, but the wife cannot have an accrual from the childrens' shares. Hence, the childrens' shares are wholly separate from the wife's share, but the wife's is not separate from the childrens' shares? 

Forgive my repetition but I am totally lost. Depending on the interpretation the consequences vary greatly for me due to this being a cross-border inheritance with different national laws being applied.
Greatly appreciate any assistance.
Kind regards,
Monty

Savvy_Sue

We may be able to simplify slightly: how old are the children now, are they resident in the UK, was the testator resident in the UK, and which borders are you having to worry about? 

(In the UK, it's extremely hard to restrict inheritance beyond the age of 18, whatever the will says, for example.)

doodling

Hi,

Savvy_Sue said:

We may be able to simplify slightly: how old are the children now, are they resident in the UK, was the testator resident in the UK, and which borders are you having to worry about? 

(In the UK, it's extremely hard to restrict inheritance beyond the age of 18, whatever the will says, for example.)

The wording does appear to successfully prevent inheritance until the age of 25 as the bequest depends on the child reaching 25. If they don't make it then presumably the bequest gets redistributed to others, not the child's heirs. This would prevent a child breaking the trust and getting the money at 18 as there is the possibility that they won't be entitled to it as they might die in the subsequent 7 years. It does create a long term trust which some poor soul(s) will have to administer and which I personally wouldn't foist on my executors.

With respect to the original question, the will appears to give one third to the wife and two thirds to the children in separate, stand alone trusts. There may be additional complexity in how things are handled if the wife dies or no children reach 25 but we haven't been given the wording which covers that.

If it is really important then a paid for opinion from a solicitor, who can take into account the actual position with the wife and children, would be a good idea.

Savvy_Sue

doodling said:

Hi,

Savvy_Sue said:

(In the UK, it's extremely hard to restrict inheritance beyond the age of 18, whatever the will says, for example.)

The wording does appear to successfully prevent inheritance until the age of 25 as the bequest depends on the child reaching 25. If they don't make it then presumably the bequest gets redistributed to others, not the child's heirs. This would prevent a child breaking the trust and getting the money at 18 as there is the possibility that they won't be entitled to it as they might die in the subsequent 7 years. It does create a long term trust which some poor soul(s) will have to administer and which I personally wouldn't foist on my executors.

Fair point. And as you're likely more knowledgeable than me, would a Deed of Variation be able to break this kind of thing, or not because of the kind of trust that's been set up?

doodling

Hi,

A deed of variation could get rid of the trust but there would be challenges:
1. It may not be in a child's interest to agree to a variation as if another child dies before 25 then their share of the two thirds would get larger.
2. Because of (1) then the children would need to do the variation themselves between the age of 18 and 25. It couldn't be done on their behalf.
3. The time limit of 2 years for a DoV might not work with (2).
4. We haven't seen the text which explains what happens if no children reach 25 - whoever benefits in that case would have to agree as well and I can't see any benefit to them in doing that from a purely financial perspective.

In summary, I think everyone is probably stuck with the trusts. They're not a bad thing but do stretch the management of the estate out somewhat, I'm more a fan of getting it over and done with.

Malthusian

doodling said:

3. The time limit of 2 years for a DoV might not work with (2).

As I understand it they could still do a deed of variation after two years but it would not change the tax position. I.e. the trust would have had to pay tax at trust rates while it was in effect.

If all the beneficiaries want to break the trust after 2 years (including the backstop beneficiary who gets the money if no children survive 25) then they don't need to vary the Will, they just ask the trustees to exercise their rights under Saunders v Vautier.

(We don't know which country we are in and Saunders v Vautier is an English precedent, but it's common law and the same logic applies in Scotland and NI, only with a lower age of majority in Scotland.)

We haven't been given much information but the major obstacle to breaking the trust is if one or both children are minors.

Monty314

Good morning, First of all thank you all very much for the insightful replies. Incredible and so quickly.

Commenting on each reply:-

Savvy_Sue 1st: All the children survived and are over 25. Some of the children are UK resident and some are non-resident. The testator was not resident in the UK. The border is a sinlge country in europe with a continental legal system based on a written civil code that includes rigid clawback and forced heirship rules. This country is also the law of domicile that, according to English law, the Deceased's movables situated in the UK will be distributed.

Doodling 1st: Your comment about "separate, stand alone trusts" is an important factor for the european country's code. I am trying to interpret the Will to understand amongst other things whether the beneficiaries were given 'separate parts'. An indication of this would be that the children can incease but the wife not. I copy/typed the text and there is no other text that relates to the shares or the parts or what happens if all children do not reach 25. This would also be another important signal for the european code.
I am open to agreeing a fee as payment to an expert solicitor...

Savvy_Sue 2nd: Very interesting the deed of variation, because some fo the children have indeed executed a deed of variation and some have not.

Doodling 2nd: Forgive my not undertsanding sufficiently 4., are you saying any deed of variation (DoV) must be agreed by the person who benefits if one of the other beneficiaries do not benefit due to their executing a DoV? Would that mean if some children have executed a DoV the other remainder children would have to agree and sign the DoV? That hasn't happened in our case...
I am starting to think this is more involved than before posting and I certainly need a paid expert solicitor. Is there a way that any members who feel they have the necessary expertise to contact me in private direct message? If so, please fell free to contact me.

Malthusian: I am not familiar with any case law, but in our case the children who wish to vary have already done so.

Thank you all again very much, you have been of immense help. I am interested in receiving contact details for any member who feels they have the necessary expertise. I think the matter is quite involved and maybe now not approriate for me to continue requesting comments via the forum.
Kind regards

getmore4less

If all the kids were over 25 when the testator does the payout would be immediate.

doodling

Hi,

A DoV can only be executed if all those adversely affected agree. In the case of the trust for the children in the original post, there is the possibility that no children reach 25 and a properly written will would identify who would get the money in that case (or the bequest may simply fail and it ends up with the wife - something to check with a solicitor). To break the trust before the first child has reached 25, that person would need to agree the DoV (or the breaking of the trust more generally) as they are giving up the possibility of money in the event that all the children die before 25.

As you have now told us that all the children are over 25 then what will happen is that the trust for them will come into existence, receive the bequest, pay out as per the will and disappear again. It is effectively identical to sharing two thirds of the residual estate equally amongst the children.

The will did not give the children separate parts as how much each child received depended on how many children there were and how many survived to 25. Because the children were all over 25 when the testator died then the practical effect was to give the children separate parts. How another country's law interprets that is way outside my ability to guess.

It is likely that the wife was given a separate part as it was a defined part of the residual estate.

There is a further wrinkle in that both trusts are formed from the residual estate and therefore its size was never fixed in the first place - whether this affects the interpretation of separate parts is another question.

I don't understand the text you wrote about increases in the trusts. When the testator died the residual estate would have been split into a one third portion for the wife and a two thirds portion for the children. The purpose of the trust for the wife is unclear - does she not simply get the money? The two thirds for the children is held in trust and paid out as each child reaches 25. If a child dies before they reach 25 then the portions for the other children (perhaps including those who have already had their payment) would be increased. If no child reached 25 then I'm guessing the money would go to the wife.

Monty314

Thank you Getmoreforless and Doodling.

That the trusts still come into existence is what I thought and also helps me.

Important for me under the foreign country law, that initially (time of drafting and execution) the children were not given separate parts yet the wife was given a separate part.

The sizing of the estate is not so important, rather that they were designated separate parts.

Regarding my saying "increases", I meant in the event any of the children died then the remaining childrens' shares would increase equally between them, whereas the wife's share would not increase. Meaning, if there were 5 children (13.333% each) and 2 died, then the 3 remaining children would increase to 22.222% each, but the wife doesn't participate in the increase between the children and thus remains with 33.333% share. This is another indication that the wife had a separate share from all the children.

Also, if as Doodling says, the children having all survived and aged 25, this has the practical effect of giving each child separate parts (between themselves), then that also helps me under the foreign law as now each and every beneficiary has separate parts (including the wife).

I believe the purpose of the trust for the wife was essentially to link her trust to the children's trusts ("...subject thereto upon...") such that if she died or the trust failed then her share would pass to the children. Knowing the Deceased, it wouldn't surprise me that he wanted to protect the children and make sure all his estate went to the children if the wife died or for some reason couldn't or didn't wish to benefit. This link seems to be one way (wife > children) as the Deceased stated if a child died their share would onlybe shared between the other children and not with the wife.

The question of what happens to the childrens' shares if they all die is not of concern to me because under the foreign law their shares are prohibited from going to the wife due to forced heirship rules and would therefore fall out of the Will and into intestacy.

I am no expert but under English law it might be the childrens' shares would also fall out of the Will and then follow English intestacy rules. If affirmative, this would actually be the same as under the foreign country's law except nothing would go to the wife rather other of the Deceased's direct family members.

Thank you for continuing to comment. All very interesting and helpful.

Monty314

Just a quick question on finding an expert solicitor or maybe better a barrister to assist in giving an English law legal opinion on the interpretation of the Will and especially this clause....can any of you suggest the necessary area of expertise of solicitor and barrister for my search? For example, 'private client' or 'wills and probate' or 'contentious probate' etc.? Thank you again if anyone has any time.