Representation re Strathmullan Trust [2014] JRC 056 (04 March 2014)

Representation re Strathmullan Trust [2014] JRC 056 (04 March 2014)

The Representor established the trust under a fundamental mistake regarding the application of UK inheritance tax due to deemed domicile provisions. The mistake was serious, causative, and resulted in substantial unintended tax liability. It would be unjust for the trustee to retain the trust property in these circumstances. The trust is therefore set aside and declared invalid under Article 11 of the Trusts (Jersey) Law 1984.

Citation
[2014] JRC 056
Parties
Applicant: Representor; First Respondent (trustee): Clarendon Trust Company Limited; Beneficiary/potential Beneficiary: Second Respondent (wife of Representor); Beneficiary: Third Respondent; Notified Party: HM Revenue & Customs (HMRC); Notified Party: HM Attorney General in Jersey
Jurisdiction
Jersey
Judgment Date
04 March 2014
Procedural Posture
Representation (trust Law) / Judgment on Application to Set Aside Trust for Mistake
Outcome
Trust set aside and declared invalid for mistake. Trustee holds trust fund as bare trustee for Representor.
Legal Topics
Setting Aside Trusts for Mistake, Inheritance Tax Liability, Trustee Indemnity and Costs, Mistake of Law and Fact, Court Powers Under Trusts (jersey) Law
Trusts and Estates Taxation Setting Aside Trusts for Mistake Inheritance Tax Liability Trustee Indemnity and Costs Mistake of Law and Fact Court Powers Under Trusts (jersey) Law

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Parties

Representor

Applicant

Clarendon Trust Company Limited

First Respondent (trustee)

Second Respondent (wife of Representor)

Beneficiary/potential Beneficiary

Third Respondent

Beneficiary

HM Revenue & Customs (HMRC)

Notified Party

HM Attorney General in Jersey

Notified Party

Procedural Posture

Representation (trust Law) / Judgment on Application to Set Aside Trust for Mistake

Legal Issues

  1. 1 Whether the Strathmullan Trust should be set aside for mistake under Article 11 of the Trusts (Jersey) Law 1984
  2. 2 Whether the mistake as to UK inheritance tax consequences justifies setting aside the trust
  3. 3 Whether the trustee is entitled to indemnity for costs

Ratio Decidendi

The Representor established the trust under a fundamental mistake regarding the application of UK inheritance tax due to deemed domicile provisions. The mistake was serious, causative, and resulted in substantial unintended tax liability. It would be unjust for the trustee to retain the trust property in these circumstances. The trust is therefore set aside and declared invalid under Article 11 of the Trusts (Jersey) Law 1984.

Court Disposition

Trust set aside and declared invalid for mistake. Trustee holds trust fund as bare trustee for Representor.

Orders

  • The Strathmullan Trust is declared invalid and set aside on the grounds of mistake under Article 11 of the Trusts (Jersey) Law 1984.
  • The Trustee holds the trust fund and all profits as bare trustee for the Representor.