Part A:

Trust can be utilised by an individual with the hope of benefitting his or her offspring or family members. A trust empowers the grantor with the authority of who gets what and at what age. The process in which they get that amount and what is the exact reason behind getting those assets mentioned is also predetermined in trust drafting policies. The concept of trust is analogous to a container where a grantor can incorporate assets like real estate, insurance policies and investments. These pre-disclosed assets then become the sole property of the trust; which in turn is managed by a person selected by the grantor known as trustee. Trusts are created for funds to be dispersed at later times to serve various purposes. Trusts can be diversely classified on the basis of purposes namely living trusts, marital trusts, credit shelter trusts, special needs trusts, charitable trusts and many more. In accordance for trusts to function properly, grantors need to consult with financial experts for guidance during drafting of the trust.    

Of late, due to recent mayhem caused by the Brexit phenomenon, the UK government is restructuring its policies regarding economic aspects of the nation. This is done to prevent further damages from the aftershock of Brexit. The UK government is heading towards implicating the fifth directive of the EU related to money laundering otherwise known as 5MLD. This implementation requires drastic change in the trust register of the UK. However, the information of this trust is completely in the hands of the government and lacks transparency to its citizens.

The register serves dual objectives namely:

• Trusts that are liable to pay income tax must embrace the idea of registering itself with HMRC.
• It supports the UKs claim to have a central register that includes details of taxpaying trust owners.

The major amendments that have been done in drafting trust policies are hereby listed below:

• Registering their details with the Government is mandatory nowadays. It doesn’t matter whether the trust is paying tax or not.
• Trusts that are pre-registered needs to clarify certain crucial information regarding the beneficiary of those trusts. It is done so that the government can verify whether certain individuals have drafted trusts without exempting from tax.
• Trusts that are not based in the UK need to provide minute details about its composition to the government if and only if that particular trust wishes to acquire properties of the UK. If a certain foreign trust decides to collaborate with a service providing sectors of the UK, information regarding their beneficiaries needs to be disclosed sincerely.
• Third parties pertaining to trusts will be given access to verify details of trusts. Issues have been raised prior that if third parties want to modify the financial structure of the trust, then accessing them completely is required. To resolve this, the Government has taken this initiative.  
• If a business relationship is established between a trustee and an industry that belong to the service providing sector; then submitting integral details coherent to the owner is of utmost necessity. Government undertook this measure in lieu of preventing misunderstanding between both the said parties.
• If certain degree of disparity is observed between the details provided by the grantor regarding the information of the beneficiaries that is received with due diligence by the service providing body; and the data that the register contains, then reporting of this discrepancies to the UK register immediately is one of the responsibilities of the service provider.
• Relevant information pertaining to the trusts needs to be informed within 30 days of trust creation to the register. After amendments made in terms of beneficiaries of trust, the register must be updated within 30 days.

All the above mentioned obligations need to be fulfilled with due sincerity. Many of these obligations are more complex than they seem to be. Especially for trustees that are not based in the UK, unawareness of these changes may act as a biggest impediment when the time comes to liquidate the assets of trusts.  

Categories of Trusts that need to register:

Technically, all UK based trusts need to be registered. Though, that may appear to be the case, a certain classification of trust are averted these hassle of registration, which are briefly discussed hereinafter:

• Trusts that are born under execution of the law are excluded primarily. For instance, if an untimely demise of a person occurs and there is no will regarding the future holder of the estate of that person; then this intestate property trusts are exempted from due registration. If a person is fraudulently entertaining the belonging of a trust rather than its true beneficiary, then constructive trusts are born. This sort of trust can avert registering themselves in the registry.
• Trusts that are devised pertaining to joint ownership of a bank or other forms of properties, and only if the beneficial owners and the legal ones are same; then recent UK trusts register does not need the integral data regarding it.
• Charitable trusts or pension trusts need not to be compliant with the utter registration process.
• Trusts that are composed of certain statutory measures for the sake of beneficiary to benefit from them; for example, employee trusts are one of this kind which can avoid registration.
• If the trust is commercial in nature; that is syndicated loans or bonds issues do not need to go through the arduous process of registering them.

Although no clear decision has been formulated by the government if bare nominee trusts are required registrations or not. HMRC will assist trustees further down the road by drafting more vivid policies that are intelligible to all beneficiaries. One thing that must be kept in mind is that trusts which however can be classified from above mentioned exemptions still need registration if it is taxable.

Since the register of UK trust is dual natured; thus it requires more specifications. Information that is required to be disclosed are mentioned as follows:

• Date of the trust foundation and its respective names are to be clarified henceforth.
• Assets that are included whence constructing the trust are required to be mentioned prior to registration. Monetary equivalency of these assets should also be present in the drafting form.
• Pre-disclosing of the administered place of trust is mandatory.
• Identification of each and individual of the beneficiary owners is mandatory in registration. Along with it, the extensive interrelationship of those beneficiaries should be clarified prior to registration.
• Beneficiaries can be defined as trustees, settlers and anyone who falls under the continuum of having authority regarding anything to do with the trust.
• Authorities related to trust can be referred to as individuals with the power to make certain amendments in the trust structure or even change the trustees or exercise powers to other’s consent.
• Therefore to avoid any misconception amidst the beneficial owners, an individual should be addressed as protector of the trust. This person should have the final say in restructuring the trust.
• One of the significant aspects of trust foundation is a clear and vivid description of potential beneficial owners.
• However, if the beneficial owner is contingent (that is the person is only liable when certain predetermined conditions are met) then as per the norms mentioned in the HMRC guidelines, acknowledgement of this person as potential beneficiary is not a viable option.

Trusts that have already gone through the registration procedures prior to amendment needs to submit all these aforementioned details before 10 March 2022. Trusts that are still unborn have two options; either undergo the entire paperwork within pre-disclosed date or within one month time span.

If trust parties are found guilty of not complying with the norms of HMRC then penalising duly is inevitable. However, if found that noncompliance is inadvertent in nature then ramifications are minimized to a certain extent. This is done especially for foreign individuals.          

Strata of individual can access the information that is stored in the register. The name of which parties are notified below:

Customers: For instance, if the Trust decided to go into a business venture tagging along any company form service providing background, that is based on UK; then trustees need to disclose full details regarding their beneficial owners. If found inconsistency with details coherent to protector or potential beneficiaries then reporting as such is mandatory.

Third parties: Distinct third parties with interest that is absolutely legitimate can be permitted to observe details mentioned within trust drafting form. If the third parties suspect that this trust is used for any illegitimate activities or the monetary gains from this rust will come to the aid of certain individuals with malign intentions then distinctive third party organizations can verify and even summon the potential candidates those who stands to gain from the trust. A clearance from the Government is mandatory for the third parties to investigate into the trust declarations.  

Safeguard/appeals: Information pertaining to the trust declarations will not be handed over to anyone if it is suspected that the harm of un-proportionate degree might come if the data are disclosed. Additionally, if the potential owner turns out to be a child or yet to reach certain age then also the trust details will to be available to them.

Part B:

The following part of the study revolves around the idea of role playing as an advisor of Jack in the context of identifying properties that are mentioned below the case study is entitled to whom.

Case Study:

The penthouse that belongs to Bertie, it was intended for Sallie, who is sister of Bertie. Jack, as per Bertie’s wishes, becomes the trustee of the penthouse that is meant for Bertie’s sister Sallie. In the following day, Bertie reminded Jack of the pre-agreed terms. Bertie executed transfer of title to Jack by complying with the Land Registry norms. Ineptus, the solicitor of Bertie, was meant to send those signed forms of the Land Registry to Jack’s place.

The penthouse:

During the proceedings of the case study, the untimely demise of Bertie complicated the situation. Since Ineptus, being the legal advisor of Bertie, has yet to hand over all the legal paper works that will officially make Jack the owner of the penthouse. Typically a will only works when someone passes on, so technically there is no benefit when that person is alive. It is designed specifically when Bertie passes on, the trust is going to ensure that the penthouse is going to Sallie. However, Clytemnestra, his daughter, who Bertie mentioned by name in his will is now in charge of the estate. Now here lies the rub, since the will attached with the name is not handed over to Jack. However, if the papers are submitted even in proper time, it does not change the fact that the ownership of the property will forever be Jack’s. The reason behind this is because as per Bertie’s will Clytemnestra is the sole owner of the penthouse. However, the land registry clearly states that the penthouse recently belongs to Jack (if the form is transferred), the form of which is now in the possession of Ineptus and consists of signatories of Bertie’s. Thus the process of probate needs to be initiated to identify the clear one of the estate. Now the time taken by these probation procedures might take time up to several months if not years. If Bertie’s daughter is the owner of the penthouse as satiated in his will. Clytemnestra still has a ground for contradicting the outlines of a will. However the solicitor of Bertie has a voice in this matter making it advantageous for Jack since the process is yet to be carried out. Thus, eventually if Ineptus registers the paperwork in the office of Land Registry then only the penthouse will go to Jack, to hand it over to Sallie. Otherwise, the property will remain in the hands of Clytemnestra.                  

The share of Remove Ltd:

The only relative convenient part to make a judgment in this entire case study is the possession of five hundred shares of Remove Ltd. Thomas, is another person who is the trustee of the Bertie’s share possession of Remove Ltd. Emily, Bertie’s niece is chosen to be the owner of those shares. As a good gesture towards his niece Bertie wanted her to be the Remove Ltd.’s share owners. The sanguine part is that Bertie’s timely phone call to Thomas to assure that the shares are transferred to Emily. Despite the fact that all of Bertie’s shares are given to Clytemnestra with reference to Bertie’s will. Thomas could have easily done the paperwork required to transfer it in the name of Bertie’s niece. Although the process is time taking, which gives enough scope for Clytemnestra to contradict the claims made by her father; Emily’s sole chance to be in charge of those shares is depending on the power of Thomas’ authority as a trustee. As from Jack’s view point, if Thomas has done his job on time then Emily stands to gain; otherwise Clytemnestra is still the current shareholder of Remove Ltd.      

The jewellery:

Margaret, another niece of Bertie, is given a call by Bertie to educate her regarding the possession of jewellery. These jewelries are the property of Bertie’s grandmother. Harry, who is Bertie’s brother, is now in charge of a trust which is composed of the jewellery. Harry, later on, handed over the charge to Bertie. Thus prior to Bertie’s passing on, he became the sole authority of the trust. Although Margaret is promised that the jewellery is now hers and Bertie is holding it on her behalf for the time being. Clytemnestra has been the owner of those jewelry as well. Since his father’s will is not addressed properly by Ineptus; a lot of the possession of Bertie is not clearly defined who stands to gain after his demise. Again a similar issue arises since there is a clash of interest between the will of Bertie and the phone call made to Emily. However from a legal point of view it is hard to find solid ground and evidence which would ensure that Emily will gain from the deal. Bertie told her that he will hand over the jewellery to Emily but that does not mean that Bertie has gone through the time taking process of converting those paperwork in Emily’s name. Thus in all fairness, it can be concluded that the jewelry that once belonged to Bertie’s grandmother will be in his daughter’s hand. Jack as his trustee should consider the main entitlement of the jewelry goes to Clytemnestra. However, if the appropriate paperwork has been carried out then only Margaret can be entitled, otherwise not.           

The antiquarian books:

Last but not least, of all the disputed aspects of Bertie’s properties, come the antiquarian books. The only positive part in this judgment is that there is no shred of evidence that these books belong to Clytemnestra as well. However, one must indulge in the previous events that occurred between Bertie and David. Of late, the health of David, who is lifelong friend of Bertie, is not feeling up to the mark. After being recently admitted to a healthcare facility, he tumbled upon the fact that his days in this world are numbered. As a token of being a friend indeed, David wanted someone to hand over his most valued possession of antiquarian books; and who could be better than Bertie. Thus he sent for his nurse and informed her to give the house keys to Bertie’s. The twist in the case is that the nurse did not find enough time to go around Bertie’s place and give him the keys. Three weeks later David passed away. As of that juncture, there has been no point of contact between both parties (i.e. nurse and Bertie). The recent demise of Bertie really made things worse, since not only was the nurse being able to deliver the house keys to Bertie; but the last wishes of David also remained unfulfilled. This unfortunate turn of events really brings up the question that will Jack be in possession of Bertie’s antiquarian books as his trustee. To begin with, Bertie did not become the owner of the books at his last point of life. Thus the books remained in David’s house which completely takes the antiquarian books out of the equation. Thus no one from Bertie’s family will be the owner of those books.         

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