A news story hit the headlines last year regarding a dispute around the inheritance of Elizabeth Hurley’s son Damian. The story highlighted an issue around trusts and how they are set up, and the importance of using a professional financial adviser.
D amian Hurley’s American liabilities after his death. However around twenty years later, Peter’s son Steve Bing went on to have two children in ‘non-exclusive’ relationships with two different women, one of whom was Elizabeth Hurley. Neither of the two children spent much time in the family home. In fact, Steve Bing initially claimed that Elizabeth’s son Damian was not his child – although this was quickly disproven in a paternity test. The dispute arose when Steve Bing’s other child, Kira Kerkorian, started making enquiries about her entitlement under her grandfather’s trust. This in turn led to one of the trustees seeking clarification of Peter Bing’s intentions, as Peter said when he drew up the trust almost forty years ago, he intended that the term ‘grandchildren’ did not mean children who had been born out of wedlock and who had not spent a substantial part of their lives in the family home. The quarrel quickly escalated and went to court, where a Californian judge declared that there was no ambiguity, and that the term ‘grandchildren’ was applicable, whether or not their parents were married at the time, and irrespective of how often they had visited the family home; so Damian and his stepsister Kira will both be eligible beneficiaries when the time comes. The Hurley case raises an important point, which is equally applicable in the US and UK, namely the importance of being absolutely clear about your objectives when drawing up a trust to protect your assets and to benefit your family after you have died. Getting legal and financial advice is paramount and working with a trusted financial adviser and tax professional will help to ensure that your wishes are laid out in the correct way. grandfather is Peter Bing, who set up a family trust in 1980 for the benefit of his future grandchildren, and to minimise his estate’s tax
It is also vital to keep the terms of the trust applicable to your life as it evolves, and your circumstances change. Trusts are complex arrangements and when setting them up you need to be unequivocal in your intentions, to avoid any misunderstandings or disputes further down the line. This is especially true if you wish for your blood relatives to benefit from your estate. There have been numerous cases where a beneficiary or beneficiaries of a trust have divorced and remarried, which can cause problems when the trust needs to be distributed.
For example, this is a situation which occurred recently at Scrutton Bland:
• A trust fund was set up several years ago by our client Mr W to leave a sizeable sum of money to his daughter
• The daughter married but there were no children
• The daughter then died, and her will left everything to her husband who inherited her trust fund • The husband then remarried and had children with his second wife. They moved away and have lost touch with Mr W • The trust fund is now eligible to be inherited by children of the second marriage, who are no relation to the client – and he is powerless to prevent this happening
If you are thinking of setting up a trust fund and would like more information, contact Rob Wood on hello@scruttonbland.co.uk or call 0330 058 6559 .
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