In the matter of the V Trust [2015] JRC 234B (19 November 2015)

In the matter of the V Trust [2015] JRC 234B (19 November 2015)

The V Trust was established by the representor under a fundamental mistake as to its tax consequences, specifically the creation of substantial inheritance tax liabilities. The mistake was sufficiently serious and but for it, the representor would not have created the trust. It is therefore just to set aside the trust under Article 11 of the Trusts (Jersey) Law 1984.

Citation
[2015] JRC 234B
Parties
Representor: A; Trustee: Bank of Scotland Trust Company International Limited; Beneficiary: Oxfam; Notified Party: Attorney General; Notified Party: HMRC; Beneficiaries: Three children of Representor
Jurisdiction
Jersey
Judgment Date
19 November 2015
Procedural Posture
Application to Set Aside Trust / Judgment on Application
Outcome
Application granted. The V Trust is declared invalid and set aside for mistake.
Legal Topics
Mistake in Trust Creation, Tax Consequences of Trusts, Setting Aside Trusts, Inheritance Tax Liability
Trusts Private International Law Tax Mistake in Trust Creation Tax Consequences of Trusts Setting Aside Trusts Inheritance Tax Liability

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Parties

A

Representor

Bank of Scotland Trust Company International Limited

Trustee

Oxfam

Beneficiary

Attorney General

Notified Party

HMRC

Notified Party

Three children of Representor

Beneficiaries

Procedural Posture

Application to Set Aside Trust / Judgment on Application

Legal Issues

  1. 1 Whether the V Trust should be set aside on grounds of mistake under Jersey law
  2. 2 Whether the representor made a relevant mistake as to the tax consequences of the trust
  3. 3 Whether the mistake was sufficiently serious to render it unjust for the trustee to retain the property

Ratio Decidendi

The V Trust was established by the representor under a fundamental mistake as to its tax consequences, specifically the creation of substantial inheritance tax liabilities. The mistake was sufficiently serious and but for it, the representor would not have created the trust. It is therefore just to set aside the trust under Article 11 of the Trusts (Jersey) Law 1984.

Court Disposition

Application granted. The V Trust is declared invalid and set aside for mistake.

Orders

  • The V Trust is declared invalid under Article 11 of the Trusts (Jersey) Law 1984.
  • The trust property is to be returned to the representor.