In the matter of the Indigo Trust [2023] JRC 047 (21 March 2023)

In the matter of the Indigo Trust [2023] JRC 047 (21 March 2023)

The Settlor made a fundamental mistake as to his UK inheritance tax status and the tax consequences of settling assets into the Trust in April 2019. The mistake was sufficiently serious and causative to justify setting aside the transfer under Article 47E. However, the Court has no power to declare that a trust on the same terms has existed since 30 November 2020, as this would amount to substituting a different transaction and is not permitted under Jersey law or the Court's equitable jurisdiction.

Citation
[2023] JRC 047
Parties
Applicant: Settlor; Applicant: Trustee; Interested Party: HMRC
Jurisdiction
Jersey
Judgment Date
21 March 2023
Procedural Posture
Representation (trusts) / Judgment on Application to Set Aside Trust Disposition Due to Mistake
Outcome
Application granted in part, refused in part.
Legal Topics
Mistake in Trust Disposition, Inheritance Tax, Jurisdiction of Jersey Court Under Article 47 E, Setting Aside Trust Transfers, Trustee Powers and Liabilities
Trusts Law Tax Law Mistake in Trust Disposition Inheritance Tax Jurisdiction of Jersey Court Under Article 47 E Setting Aside Trust Transfers Trustee Powers and Liabilities

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Parties

Settlor

Applicant

Trustee

Applicant

HMRC

Interested Party

Procedural Posture

Representation (trusts) / Judgment on Application to Set Aside Trust Disposition Due to Mistake

Legal Issues

  1. 1 Whether the disposition of property by the Settlor to the Indigo Trust on 1 April 2019 should be set aside as voidable due to mistake under Article 47E of the Trusts (Jersey) Law 1984
  2. 2 Whether the Court can declare that a trust on the same terms has existed since 30 November 2020

Ratio Decidendi

The Settlor made a fundamental mistake as to his UK inheritance tax status and the tax consequences of settling assets into the Trust in April 2019. The mistake was sufficiently serious and causative to justify setting aside the transfer under Article 47E. However, the Court has no power to declare that a trust on the same terms has existed since 30 November 2020, as this would amount to substituting a different transaction and is not permitted under Jersey law or the Court's equitable jurisdiction.

Court Disposition

Application granted in part, refused in part.

Orders

  • The disposition of property by the Settlor to the Indigo Trust on 1 April 2019 is voidable and of no effect as at that date.
  • The Trustee is entitled to retain remuneration and reimbursement for expenses and liabilities reasonably incurred, including costs of and incidental to the Representation.