West & Anor v Bullivant (2026) EWHC 869 (Ch)

The Claimants were the present trustees of an inter vivos settlement known as the F.R Kerry Family 1962 Trust.

The Defendant was the life tenant of the Trust. The Defendant’s four children, including the First Claimant, were the remaindermen, the beneficiaries entitled to the capital of the trust fund upon the life tenant’s death. Several trust instruments were executed between 2012, 2016 and 2021, with the effect being that sums totalling approximately £3,500,000 were vested in the beneficiaries.

The Court was asked to determine the validity and effect of those instruments and whether trust assets had been lawfully distributed to the capital beneficiaries.

The Background

The Defendant, as life tenant along with the trustees, executed a Deed of Release in 2012 releasing her interest in the income of part of the trust fund in exchange for a £200k debt she owed to the trustees. The trustees were bound to administer the trust fund in accordance with the Deed of Release. A similar Deed of Release was then executed in 2016 with a similar provision relating to a loan owed by the life tenant to the trust.

In 2021, the trustees signed a written resolution whereby the life tenant surrendered her full interest in the settlement in favour of the remaindermen. The beneficiaries stood to receive equal shares of £2.5m. At the same time, a Deed of Appointment was executed formalising the agreement reached in the written resolution and the division of the settlement between the four remaindermen beneficiaries.

In 2024, the trustees took advice from new solicitors, and it became apparent they had exercised a non-existent power of appointment they understood arose from the 1962 Settlement. Technically, the class of remaindermen beneficiaries was not closed in accordance with the principles in Figg v Clarke (1996) arising where there is uncertainty as to whether a parent will have further children so as to effectively add to a class of beneficiaries.

The trustees wrote to HMRC for clearance and to confirm their position was that the effect of the 2021 Deed of Appointment was to distribute the capital of the trust fund to the beneficiaries on the footing that the previous life tenant, their mother, was then aged 74 and incapable of having any further children and therefore, the trust could be wound up. HMRC stated it could not provide clearance on the legal effect of the trust document but opined it was unsure whether the life tenant had in fact validly surrendered her interest in possession.

The Application

Following that, the trustees applied to the Court under CPR 64.2 for the Court’s determination of the following questions:

1. Whether the Defendant, the life tenant, validly surrendered her life interest in the Trust in 2021;
2. Whether the benefit of loans (being the legal right to recover the debts) made by the Trust to the Defendant was validly assigned to the remaindermen beneficiaries;
3. Whether the trustees were entitled to administer the Trust on the footing that the class of remaindermen, so the capital beneficiaries, was closed.

HMRC elected not to be joined as a defendant to the proceedings, despite having the contrary interest and advanced no positive case.

The Decision

On each question, the Court found as follows:

1. The basic principle drawn upon was that the effect of a surrender of a life interest is to accelerate the interests of the remaindermen, which take effect in possession, although acceleration itself does not close the class of remaindermen. In addition, a surrender of a life interest under a trust is a disposition which must be in writing and signed pursuant to s53(1)(C) of the Law of Property Act 1925. The issue with the 2021 Deed of Appointment was that it did not contain an express release clause. The Deed merely recorded that the Defendant had agreed to surrender her life interest in the fund. It was held that despite the lack of an express release clause, a valid surrender took place on account of:

• the recital recorded in the Deed that the Defendant had agreed to surrender
• it forming a series of transactions intended to distribute trust property to the remaindermen beneficiaries

2. On whether the loans had been validly assigned, it was ruled that on a balance of probabilities, they had been assigned in equity. It was argued there was no statutory assignment in accordance with s136 of the Law of Property Act 1925. The remaindermen relied on the fact of a valid assignment and presumption of regularity. The judge held that the Deeds of Release clearly manifested an intention by the trustees to assign the benefit of the loans to the beneficiaries. The Defendant, life tenant, had clear notice of the assignments because she executed the Deeds of Release specifically to enable the benefit of the loans to be assigned to the remaindermen by the then trustees. The Claimants had also produced a memorandum of loan, which was professionally drafted, which refers to the recitals in the deeds of release which the judge felt helped to indicate a valid assignment. The judge found the content of the documents and conduct and motives of the interested parties to be particularly weighty when making findings of fact.

3. The problem was that under the terms of the Trust Deed the class of remaindermen beneficiaries was defined to be such of the Defendant’s children as shall attain the age of 21 at the time of the Defendant’s death. Therefore, technically the class remained open until the Defendant’s death. The Claimants relied on the long-standing authority in Re Pettifor’s Will Trusts that trustees should administer their trusts on the basis that the impossible will not happen, i.e. in this case, that the Defendant would not have further children at the age of 74 and had passed the age of childbearing. Thought was also given to more modern considerations and options which included the Defendant’s ability to adopt a child or conceive through IVF. The judge found, however, that it was virtually certain the Defendant would have no further children. The trustees were therefore entitled to distribute the trust fund and the class of capital beneficiaries was deemed closed.

This case serves as a timely reminder that trustees should regularly refresh their understanding of their express powers under a trust deed (in addition to the statutory framework), particularly where a settlement is historic, and ensure that specialist legal advice is taken as soon as any concerns arise over interpretation.