The balance would be divided equally between the four sub-trusts, taking into account, at present-day values, distributions already made to second generation beneficiaries. Thirdly, the hybrid hotchpot method would allocate the future expectations of the settlor”s daughters based on present levels of distributions to them, to be vested in their respective family sub-trusts, and the expectations at present-day values of the L Foundation. No account would be taken of previous distributions to first or second generation beneficiaries in the past. A lump sum payment would be made to the youngest branch to redress the imbalance created by the 21-year rule. This would require that different sized funds be allocated to each sub-trust to meet the calls on income arising at different stages of the trust period.
The calculations in respect of the second generation beneficiaries were to be based on the current number of grandchildren in each branch of the family and on the assumption that the ‘21-year rule’ was to continue indefinitely. A fund representing the current value of the trust was to be preserved for division between the remaining beneficiaries at the perpetuity date.
#Remoter issue full
The second method, the full expectations or allocations method, involved deciding once and for all the legitimate expectations of the beneficiaries of each sub-trust by notionally allocating funds to each existing beneficiary based on the past performance of the trust fund, and dividing the remaining capital equally between the sub-trusts for the benefit of future generations. This was rejected by the parties since the earlier amendments to the deed of settlement provided that the future expectations of the grandchildren were to be unaffected by payments which had been made to the settlor”s sons to buy out their beneficial interests. The first was the full hotchpot method, under which the trust fund would be divided equally between the four branches, taking into account (by deduction from the relevant branch”s share) all moneys so far distributed to beneficiaries of each branch. Three alternative methods of allocating funds between the sub-trusts were then proposed. The settlor”s grandchildren received income only upon reaching 21 and calculated as a proportion of an index-linked sum (dependent on available income) determined by the number of grandchildren in the relevant branch of the settlor”s family.Īfter a long-running dispute between the family members concerning the trustees” administration of the trust and investment policies, the court ordered that the trust fund be divided between four sub-trustsĬorresponding to the four branches of the family. The distribution policy adopted by the trustees following consultation with all the beneficiaries provided for an annual index-linked payment to the settlor”s widow and two daughters and a fixed annual payment to the L Foundation. The trustees were also prohibited from removing the settlor”s widow, daughters or remoter issue as beneficiaries. The deed of settlement was later amended to prohibit discrimination by the trustees against any grandchild of the settlor on the basis of the identity of his parent, the intention being that all grandchildren should have the same expectation of benefit on a stirpital basis. After his death the L Foundation was set up to fulfil this role.
In a memorandum of his wishes for the distribution of funds, the settlor provided for the future creation of a separate charitable trust as a discretionary beneficiary. At the perpetuity date, any remaining capital was to be distributed equally between the beneficiaries then living. The settlor established a trust for the benefit of his widow, children and remoter issue, under which the trustees had absolute discretion to apply the income for the benefit of the beneficiaries, accumulating the remainder to capital. The trustees and beneficiaries of a trust sought an order as to the basis for the segregation of the trust fund into four separate sub-trusts.
0 kommentar(er)
