Wills, Probate and Administration

Mistakes by trustees - setting aside

Trustees everywhere can take heart from a recent case, which reaffirms the principle that blunders made by trustees can be set aside by the court. Against the advice of counsel, the trustees made a payment to the NSPCC as a means of avoiding CGT for the settlor. Unfortunately, the payment was made in the wrong tax year - with disastrous consequences in terms of the CGT charge. The court applied the principle first established in Hastings-Bass [1975] in order to render the payment void ab initio. Although the CGT charge would have fallen on the settlor, who was not a beneficiary of the trust, the court held that it was still able to set aside the payment. This was because the trust had been designed to save tax for the settlor, and the trustees would clearly never have acted as they did had they taken the CGT charge into account. Abacus Trust Company v the NSPCC [2001] WTLR 949.

"The Practical Lawyer" December 2001/January 2002