Advise the beneficiaries whether they can take any action against Thomas or Bethany (you can assume that their investment decisions are not being questioned)
Equity and Trusts 2020-2021
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Word Guide - 2,000 Words
(excluding footnotes and bibliography)
Christopher died in 2017, leaving a will in which he appointed Bethany and Sandeep as his trustees and executors and made, inter alia, the following provisions:
a) £20,000 to be invested for Simran at 25.
b) 10,000 shares in Music Masters Ltd. to Timothy for life, remainder to Rebecca.
c) £500,000 to my wife, Amelia for life, remainder to my children, Eleanor and Jacob. The trust’s assets also included a lease of "Tong Lodge".
Bethany is a retired doctor and Sandeep is an accountant. Simran is 14 years old, Timothy is 66 years old and Rebecca is 13 years old. Eleanor and Jacob are aged 18 and 21 respectively.
In 2018, Thomas, a solicitor, advised the trustees that it would be in the best interests of the trust if they were to purchase the freehold of “Tong Lodge". The purchase was completed in June 2018. Thomas conducted all the negotiations on behalf of the trust and did all the conveyancing work.
In June 2020, the trustees created a 5 year lease of "Tong Lodge" in favour of Thomas for £10,000. There has since been a boom in property prices in the area and it is calculated that the remaining term of the lease is now worth £55,000.
In August 2020, the trust purchased the freehold of "The Barn" from Bethany for the lowest of three independent valuations. Bethany had purchased the barn in 2003.
Bethany and Sandeep would like to invest up to half of the £500,000 in commercial property which they believe will provide a secure long term profit for the trust. It has also been suggested to them by Mark, a friend of theirs who is in the process of setting up in business as a financial consultant, that ‘one of the best investments they could make’ is ‘to invest a considerable sum in purchasing vintage wine which in recent years has provided better returns than commercial property investments’.
Rebecca`s family have recently requested that the trustees consider transferring as much of Rebecca’s prospective interest as possible to another trust of which Rebecca is a beneficiary. The family have been advised that this would result in a financial benefit to Rebecca but only if Timothy does not die within the next ten years.
Simran’s father has also suggested the trustees that they must use the income arising from the trust to assist Simran, if they are requested to do so.
In light of the above circumstances:
1. Advise the beneficiaries whether they can take any action against Thomas or Bethany (you can assume that their investment decisions are not being questioned); and
2. Advise the trustees on their investment policy and whether they may or must do as Rebecca’s family has requested and as Simran’s father has suggested.
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