Close an absolute Trustcontaining life policy

HappyHarry

Trustees of an Absolute trust can usually assign an investment bond to the beneficiary. I would ask Aviva what they are basing their decision not to let this happen upon.

poseidon1

TW1234 said:

Thanks for your time.

The bond is written on the life of the original owner.(Grandparent)

The template to put it into trust was provided by Aviva (they took over SunLife policies), & is headed as Absolute Trust so should meet their requirements, and they have stated that it is not a wording problem but (just)  because it is an absolute trust, which does not fit with my understanding.

.

Sounds odd but I suppose depends how long ago the transfer to trust occurred, and the nature of the  trust document used at the time.. 

Aviva' s current version of an Absolute Trust is now known as a Bare Trust ( the terminology is interchangeable).  See link below to the current version - 

https://static.aviva.io/content/dam/document-library/adviser/individualprotection/al14004c.pdf

You will see on page 3 of the proforma deed,  Section G of trustee's powers and provisions and at clause 1 (c) there are express powers to assign the trust asset.

So the question with regard to your trust document, is there no equivalent to page 3 ( as above)  containing detailed trustee powers and provisions and especially a clause 1(c)?  If your  particular trust document is devoid of any trustee powers, that is likely the problem here, ie no express powers to do anything other than encash the policy during the lifetime of the life assured.

You can now see why having sight of the absolute trust deed may have been helpful, in ascertaining the problem here. 

TW1234

The above are the relevant parts of the 

TW1234

For future readers the above are the relevant parts of the trust deed.

There are no express permissions as in the sample template but Clause I (English law) & D4 (trustees may act with equivalent power to a beneficial owner, ) would  cover their ability to assign to the beneficiary, after they become 18.

poseidon1

TW1234 said:

For future readers the above are the relevant parts of the trust deed.

There are no express permissions as in the sample template but Clause I (English law) & D4 (trustees may act with equivalent power to a beneficial owner, ) would  cover their ability to assign to the beneficiary, after they become 18.

Having perused the sample you appended I would tend to agree that in the absence of an express power of assignment, clause D4 should suffice for the purpose of the trustees being able to transfer legal ownership of the bond to the grandchild, in satisfaction of his absolute entitlement.

To that end, I see no reason why Aviva's proforma deed of assignment cannot be used for that purpose per the template attached - 

https://static.aviva.io/content/dam/document-library/adviser/ecm/in87010c.pdf



However on page 1 of the proforma deed,  the intial guidance note includes the following ;


' ....If you’re trustees and want to assign the policy to a beneficiary, remember if there’s a power of appointment in the trust (e.g. a Flexible Gift Trust; a Discretionary Gift Trust) you must first complete a Deed of Appointment of Beneficiary on an irrevocable basis.  '

That extract does make me wonder if the Aviva staff member you have been liaising with maybe under the impression  ( mistaken in my opinion) that their bond assignment template can only be used in trust scenarios which require an intermediate deed of capital appointment ( initially terminating the flexible/discretionary trust), with the assignment template the final document  in the series to complete the termination of trust in favour of the beneficiary.

There is nothing in the wording of their assignment template which restricts its operation in that way, especially since it can clearly be used to discharge the trustees' legal ownership in the case of Aviva's more up to date  Bare Trust document.

All in all I would attempt to progress this matter by completing the assignment and  tick the third box of clause 3 on page 3 and lodge with Aviva.

However, had you already progressed this far and Aviva rejected your submission on the basis of their rather spurious rationale ?

TW1234

For update.

Following further contact, Aviva have produced a sample deed of assignment for consideration by the trustees to use and effect the proposed action..

They remain silent as to why they believed it was not possible to assign a deed held in an absolute trust, but I am content that we can make progress.

Thanks for the useful support given, as I was beginning to doubt my understanding.