Formalities Flashcards
What are the formalities for disposing of beneficial ownership via testamentary transactions?
Basic policy is to support testamentary freedom of property owners to dispose of their estates as they see fit. Wills must comply with the formalities of the Wills Act 1837.
Wills must:
- Be in writing signed by the testator
- Testator intended by their signature to give effect to this will
- Signature is made/acknowledged in presence of 2 or more witnesses
- Witnesses must attest and sign will or acknowledge signature
What are the formalities for disposing of beneficial ownership via inter vivos trusts?
Must be in writing to be effective: LPA 1925 S.53
Document is subject to documentary tax, Stamp Duty. Charged according to the value of (ad valorem) equitable interest disposed of.
Grey v IRC: 6 family trusts. 1 Feb 18k £1 shares transferred to trusts. 18 Feb oral direction to trustees to hold shares equally. 25 Mar written declarations of oral instructions. The attempt to dispose of equitable interest by oral direction was ineffective as it was not in writing. 25 March was the effective disposition.
Re Vandervell (No. 1): V instructed trustees to transfer 100k shares to RCS with option for repurchase for £5k. Declared dividend so RCS got £245k. IRC argued V retained equitable interest and shares were still his due to repurchase option. Did not comply with requirement of writing.
Held: liable to pay ad valorem tax on £24k. S.53 not applicable to situations where beneficiary directs trustees to simultaneously transfer legal and beneficial ownership.
