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High Court rules to allow trust to treat illegitimate child as beneficiary

The trustees of a discretionary settlement worth £80m have received permission from the High Court to treat one of the settlor’s descendants as a beneficiary, despite being born one month before her parents were married.

The governing deed currently held by the trust allows for the trust fund to pay for the settlor’s grandchildren, as well as any of their children when they reach adulthood, and has been in place since the settlement was first executed in 1968.

However, an issue arose regarding the children of one of the abovementioned grandchildren, referred to as RS for the sake of protecting their identity. RS is married and has three children, but one of these children, V, was born before her parents were married. The question for the trustees was whether V was able to qualify as a beneficiary under the current rules of the trust, as the trust did not contain any pre-existing conditions for the provision of illegitimate children.

Additionally, the various relevant laws put in place to reform and protect the inheritance rights of illegitimate children were only put in place after V’s birth, and cannot have retrospective effect.

All parties involved in the trust agreed that V should benefit from the provisions of the trust, and thus proposed that V be made a formal beneficiary of the trust. Approval for this appointment was subsequently sought from the England and Wales High Court.

When it came to granting this approval, the High Court had to consider a number of factors. The main deciding factor was that the appointment would be to the objective benefit of V’s father RS, as it would allow him to make proper provisions for all of his children regardless of when they were born.

A further factor supporting V’s appointment as a formal beneficiary was that the entire family considered it to be the right decision, and so to exclude V from the trust could be a source of contention in the family.

Trusts are a means of safeguarding and protecting assets for the future enjoyment of other people, often children, grandchildren or incapacitated members of the family or friends. Trusts can be set up when you are alive or in your Will on your death. Some use trusts to reduce tax.

Wilson Nesbitt have an experienced team of solicitors in Northern Ireland, that draft and prepare trusts for family or tax saving purposes and provide ongoing management of Wills and other trusts.

Take the next step and call us on freephone number 0800 840 9293or make an enquiry.

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