A recent case about a family farming partnership has highlighted the need to take independent legal advice, even when a solicitor is advising the family and everyone is getting on well at the time. Without it you could be shocked by the result of future disputes, particularly when it comes to assets left in discretionary trusts or making a claim against a family member’s estate.

What happened in the case?

In the case, the deceased’s wife was unable to make a claim against her husband’s estate for provision under his Will because her claim was made too late. Usually, a spouse can make a claim under the 1975 Act if they feel they have not received a reasonable provision from their spouse’s estate. However, there are strict time frames, of 6 months from when probate is granted, to make the claim.

The Sargeant family comprised of Mr Sargeant, his wife Mary Sargeant and their two children Jeff and Jane. Mr Sargeant sadly died in 2005. In his Will he left some personal belongings to Jeff, a life policy to his wife and the balance of his estate in discretionary trusts for the benefit of his wife and Jane. Jeff was not a beneficiary of the discretionary trust.

Here lies the problem and the reason for Mary’s claim. Mary wanted to make sure that Jeff would benefit from her estate but the discretionary trust Mr Sargeant had created stated that Jeff would not benefit and that Mary was only a discretionary beneficiary. As a result, Mary was not solely entitled to any of the assets.

Before the dispute, the trustees initially agreed that Mrs Sargeant could receive some income from the trust. However, over time difficulties developed between Mrs Sargeant and Jane because Mrs Sargeant wanted to receive more from the trust and ultimately benefit Jeff. There were also discussions about selling various fields from the farmland but these problems didn’t arise until arise around 2009/2011.

By the time Mrs Sargeant had taken her own advice (around 2014) it was too late to make a claim under the 1975 Act. Mrs Sargeant still applied to the court but they decided that it would be unfair to allow a claim over 10 years after the initial Grant of Probate was received.

This outcome could have been avoided if Mrs Sargeant had taken her own advice at the time of her husband’s death as she would have been able to protect her position in the event of a future disagreement.

What happened in the case?

In the case, the deceased’s wife was unable to make a claim against her husband’s estate for provision under his Will because her claim was made too late. Usually, a spouse can make a claim under the 1975 Act if they feel they have not received a reasonable provision from their spouse’s estate. However, there are strict time frames, of 6 months from when probate is granted, to make the claim.

The Sargeant family comprised of Mr Sargeant, his wife Mary Sargeant and their two children Jeff and Jane. Mr Sargeant sadly died in 2005. In his Will he left some personal belongings to Jeff, a life policy to his wife and the balance of his estate in discretionary trusts for the benefit of his wife and Jane. Jeff was not a beneficiary of the discretionary trust.

Here lies the problem and the reason for Mary’s claim. Mary wanted to make sure that Jeff would benefit from her estate but the discretionary trust Mr Sargeant had created stated that Jeff would not benefit and that Mary was only a discretionary beneficiary. As a result, Mary was not solely entitled to any of the assets.

Before the dispute, the trustees initially agreed that Mrs Sargeant could receive some income from the trust. However, over time difficulties developed between Mrs Sargeant and Jane because Mrs Sargeant wanted to receive more from the trust and ultimately benefit Jeff. There were also discussions about selling various fields from the farmland but these problems didn’t arise until arise around 2009/2011.

By the time Mrs Sargeant had taken her own advice (around 2014) it was too late to make a claim under the 1975 Act. Mrs Sargeant still applied to the court but they decided that it would be unfair to allow a claim over 10 years after the initial Grant of Probate was received.

This outcome could have been avoided if Mrs Sargeant had taken her own advice at the time of her husband’s death as she would have been able to protect her position in the event of a future disagreement.

Are discretionary trusts still helpful to provide for your family?

Discretionary Trusts can be very useful, particularly for farming families, because assets in the Trust can be protected for future generations. They also give flexibility for the family in deciding how best to deal with the farm going forward. This is the reason they are used so frequently.

In order to maintain the flexibility and protection, no one is entitled to any of the assets in the Trust practically or for tax purposes. This is essential for a discretionary Trust for the advantages it provides, but it does leave the beneficiaries potentially vulnerable in the future.

It’s impossible to predict future disputes and we would hope they never happen but unfortunately, when they do it can have devastating effects on the family. The best way to avoid this is to take advice as soon as possible in order to protect your own position if you are a discretionary beneficiary under a Will.

For more information on discretionary trusts, please contact Vicky Timothy in our Trusts team on 0161 475 1209.

Are discretionary trusts still helpful to provide for your family?

Discretionary Trusts can be very useful, particularly for farming families, because assets in the Trust can be protected for future generations. They also give flexibility for the family in deciding how best to deal with the farm going forward. This is the reason they are used so frequently.

In order to maintain the flexibility and protection, no one is entitled to any of the assets in the Trust practically or for tax purposes. This is essential for a discretionary Trust for the advantages it provides, but it does leave the beneficiaries potentially vulnerable in the future.

It’s impossible to predict future disputes and we would hope they never happen but unfortunately, when they do it can have devastating effects on the family. The best way to avoid this is to take advice as soon as possible in order to protect your own position if you are a discretionary beneficiary under a Will.

For more information on discretionary trusts, please contact Vicky Timothy in our Trusts team on 0161 475 1209.