Trusts valid despite defects

The England and Wales High Court has ruled that discretionary trusts containing AXA offshore bonds were valid trusts, despite defects in trust documentation.

In 2014 Michael and Ann Bowack completed paperwork setting up two Isle of Man trusts. They appointed themselves and their daughter Claire Saxton as trustees and named Claire a beneficiary.

They sent cheques of £325,000 each to AXA Isle of Man for the purchase of bonds for the trusts.  AXA noticed the following discrepancies in the trust documentation:

1. Claire’s signature was not witnessed
2. A date was left blank
3. The documentation did not identify the trust property properly

However, prior to raising this discrepancies, AXA cashed the cheques and issued bonds to Mr and Mrs Bowack. AXA then argued that the defects in the paperwork destroyed the trust arrangement and refused to accept that the bonds were held in trust.

Mr and Mrs Bowack entered into a long correspondence battle with AXA to establish the validity of their estate planning and ultimately, resorted to the courts and were forced to sue their own daughter.

Hearing the case, the judge declared the trusts valid despite the discrepancies and commented that “On the evidence it is clear that the claimants were not making a gift of the money to [AXA], and neither were they paying it with a view to that money being held on trust by that company for their intended beneficiaries”.

Aiden Briggs TEP, Barrister at New Square Chambers comments that private client practitioners will be familiar with paperwork of this kind but that ‘it will often be possible to glean a valid trust even from the most inept documentation’.

For advice in relation to trusts, contact our friendly Private Client team.

Rebecca Dixon is a solicitor in the private client department at Barker Gotelee, Ipswich solicitors.

Personal Solicitors Ipswich – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]