Advise and explain if the following dispositions are valid.
Problem Questions:
- Nizam is executor of Liz’s estate with Mia as sole legatee. He is
also trustee of a trust for the sole benefit of Isla. Advise Mia and
Isla as to any claims available to them.
On 1 February 2022, Nizam transferred £35,000 from the estate
to his personal savings account (‘the Account’). At the time, the
Account held a balance of £5,000.
On 14 February 2022, Nizam transferred £10,000 from the
Account to his girlfriend, Orla. Orla asked no questions and
accepted the money, using it to clear her credit card debt.
On 1 March 2022, Nizam transferred £20,000 from the Account to
his brother, Jas, who innocently accepted the money. Jas used
£10,000, along with £40,000 of his own savings, to buy a small
commercial property which is now worth £100,000. Jas spent the
remaining £10,000 on a trip to Las Vegas.
On 10 March 2022, Nizam’s salary of £2,000 was paid directly into
the Account.
On 12 March 2022, Nizam took £10,000 from Isla’s trust and paid
it into the Account. Nizam needed to obtain agreement from his
co-trustee, Holly, to do this. Holly asked no questions and agreed
to the withdrawal.
On 15 March 2022, Nizam used £2,000 to buy an antique vase,
which has now been valued at £20,000. Later that month, Nizam
spent £10,000 on a weekend trip to Monaco. - Advise and explain if the following dispositions are valid. If they
are not valid, you must explain what will happen to the property.
a) Ash and Brent are medical students who live together in a
rented flat. Over the last year, both Ash and Brent have
regularly paid money into a current account to cover
household expenses. Brent has said to Ash on over twenty
occasions: ‘don’t worry, the money in the account is as much
yours as it is mine’.
b) Years ago, Ash inherited some shares from his grandfather.
The shares are held on trust for him by Shami. Ash wants to
give Delilah some of his shares. Ash sends the following email
to Shami: ‘Please give my shares to Delilah.’ Shami fills in a
stock transfer form and sends it, together with the share
certificates, to the company registrar. Ash is still the registered
owner of the shares at the time of his death.
c) Ash is walking to a lecture with his friend Estella when he is
knocked down by a car. Ash hands Estella his mobile phone
and says: ‘I don’t have much time. Look after this for me. If I
don’t make it, keep it. The code to unlock it is 5830.’ Ash dies
shortly afterwards. - Bashir and Alice are trustees of a family trust. Bashir is a solicitor
and Alice is a family friend. At the end of 2021, the trust fund
consisted of £250,000 in a savings account generating 1.3%
interest per annum and a freehold penthouse apartment rented
out to tenants. The fund is held for Christine for life, remainder
to his twin daughters Jessica and Diana. You are required to
advise Bashir and Alice of their liability in each of the following
scenarios.
a) In March 2022, the lease granted to the tenants in the
penthouse apartment expired and the trustees decided to sell
it. Alice decided to buy the apartment. She paid the full
asking price of £2,000,000 and the proceeds were paid into
the savings account, giving a balance of £2,250,000. The
apartment is now valued at £2,500,000. Christine is unhappy
that Alice has paid so little for the apartment.
b) In late April 2022, the trustees decided to invest some of the
money in a unit trust and asked an independent fund
manager, Hamza, for advice. Hamza recommended a unit
trust and paid Bashir a commission of £10,000 to persuade
him to manage the investment; the trustees invested
£150,000 in the unit trust. The investment is now worth
£155,000. Bashir used £7,500 of his commission to buy shares
in a pharmaceutical company, which have now doubled in
value. Bashir still has the remaining £2,500 of his commission
in his personal bank account.
