EWHC Confirms Validation Of Declaration Of Trust

The England and Wales High Court (EWHC) has ruled that discretionary trusts containing AXA offshore bonds were valid, despite refusals from AXA who claimed document defects invalidated the trusts.

In 2014, Michael and Ann Bowack instructed a financial advisor to set up two Isle of Man trusts, each containing £325,000.

Mr and Mrs Bowack completed all of the relevant paperwork, appointing themselves and their daughter Claire Saxton as trustees, and also naming Claire as as beneficiary.

The cheques were sent to AXA Isle of Man who cashed them and placed the payment into bonds, which it then issued to the couple. The bonds were subject to Manx Law and only assignable with the company’s agreement.

However, prior to cashing the cheques, the documents that AXA Isle of Man noted a couple of discrepencies, which seemingly they failed to raise before cashing in the cheques.

These discrepencies were:

  • Claire’s signature on the trust forms had not been witnessed by an independent person
  • The declarations of trust as executed left the effective date blank
  • And failed to identify the trust property as two bonds

What ensued was a lengthy correspondence battle, which eventually found its way to the courts. Due to the resistance from AXA.

In short, the Bowack’s had to sue their own daughter in order to establish the validity of their estate plan.

Hearing the case, the judge decided that none of the defects on the paper work destroyed the arrangement. He declared the trusts had become valid at the point they were issued.

The judge commented:

“On the evidence it is clear that the claimants were not making a gift of the money to [AXA], and neither were they paying it with a view to that money being held on trust by that company for their intended beneficiaries.”

Aiden Briggs TEP, Barrister at New Square Chambers, noted that paperwork of the kind seen in this case won’t be new to private client practitioners.

He said:

“It will often be possible to glean a valid trust even from the most inept documentation.”

 

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