Varying an outdated trust

A landed family has successfully varied an outdated trust to give any future same-sex partners of descendants the same rights as heterosexual spouses.

In what is believed to be the first case of its kind, the High Court has approved a variation of a 51-year old trust to allow same-sex spouses and civil partners to have the same inheritance rights over property that are given to opposite sex spouses of descendants of the settlor under the terms of the trust.

The terms of the trust as originally drafted were “much in the style of a 19th century dynastic family settlement” which did not include civil partners or spouses under same sex marriages. The Pembertons, who have lived in Trumpington Hall, Cambridgeshire, for three centuries, said they felt they had ‘a moral obligation” to future generations to modify the inheritance arrangements over their ancestral seat.

The variation, which ensures that future same-sex spouses and civil partners will have a life interest in Trumpington Hall following the deaths of their spouses, was approved on the basis that it would ‘be for the benefit of the family as a whole and therefore of benefit to each individual member’ of the trust – the inheritance tax and capital gains tax benefits of which could not be replicated in a new settlement.

It is believed that the Pemberton’s are the first landed gentry to alter the definition of a ‘spouse’ in a pre-existing trust to ensure that it recognises same-sex marriages and civil partnerships.

The trust’s lifespan was also increased for another 125 years, to 2141, and additional investment powers were given to the trustees.

COMMENT

The case, which is thought to be the first regarding the recognition of civil partnerships in varying or attempting to vary pre-existing trust arrangements, highlights the progressive attitude of the courts towards outdated family settlements that have not kept pace with changes to the law.

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