Court corrects error in family trust to restore tax benefit

The High Court has corrected an error in a trust to make it effective and ensure that it provides the intended tax benefits.

The case involved the family of a woman who during her lifetime made three settlements of shares.

The beneficiaries were her three children, their heirs and four charities. There were four trustees of each settlement: the mother, the father and two others.

A clause in each settlement made each sibling the prime beneficiary of one of the settlements. In 1999, the mother amended the settlements to give the siblings certain tax advantages.

However, only three of the four trustees signed the deed outlining the amendments. By some error, the mother was not identified as a trustee and was not required to sign.

The deed was therefore ineffective, and the error was not noticed until after the mother's death. Supported by the trustees, the three children sought to correct the situation.

The court granted their application. It held that it was clear that all four trustees, including the mother, had intended to exercise their power to amend the trust and so the changes made should be considered effective.

Please contact us if you would like more information about the issues raised in this article or any aspect of wills and trusts.

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