A recent decision of the Inner House, Scotland's highest civil court, has considered a petition relating to the discharge of a Judicial Factor of an intestate estate where the heir was under 18 and the trust property was situated in England.
A petition was raised by the Judicial Factor for directions from the court. A Judicial Factor is an Officer of the Court, who is appointed by the Court in complex cases. In the context of a deceased's estate, it may be that the appointed trustees are unable or unwilling to take up or continue with their appointment. In this case, the deceased's sole heir to his substantial estate was his six-year-old son, "M". The estate was held in trust for M. The Petitioner was appointed Judicial Factor in 2016 to manage the estate given the age of M. M lived with his mother in Aberdeen, but moved to Cambridge in 2017, living in a house purchased with trust funds. M became habitually resident in England.
M is now 16 and has requested that the Judicial Factor's appointment be brought to an end, with all the property in the estate transferred to him. However, English law does not permit legal title to land - which would include the house in Cambridge - to be held by a person under 18. As such, M requested that the Petitioner transfer the house and all the property situated in Scotland, England and Wales, to his mother and a family friend as trustees, to be held in bare trust for him until he turns 18. The Petitioner sought assistance from the court in relation to these matters before applying for discharge from office.
The court considered the Age of Legal Capacity (Scotland) Act 1991 and the Children (Scotland) Act 1995 in relation to capacity and safeguarding a child's property, as well as relevant English legislation, given M's habitual residency in England. The legislation does not provide guidance as to what a Judicial Factor should do in these circumstances. The Petitioner asserted that there were additional difficulties in dealing with M's mother (the deceased's partner). She refused to assist with assets held in Thailand and encashed an ISA that formed part of the estate without the consent of the Petitioner.
M's position was, if the court considered that the Petitioner's appointment should be extended until M's 18th birthday, this would be applying English law to a Scottish Judicial Factory. If M had remained habitually resident in Scotland, the Judicial Factory would have ended on his 16th birthday, the age of legal capacity in Scotland. M maintained that this approach would be inconsistent.
The Petitioner asked the court to determine whether he was bound to transfer the moveable assets in Scotland and the heritable and/or moveable assets in England, to M, his mother / the bare trust, or whether he should wait until M is 18.
The court considered that the question to be determined was whether the Judicial Factory terminated on M's 16th birthday or, because of the restrictions on the legal capacity of those under 18 in both Scots and English law, the Judicial Factory ought to continue until brought to an end by the court. After reviewing a myriad of case law and commentary, much of it more than 100 years old, the court held that when M reached the age of 16 the property was no longer held by a "child" and Judicial Factories automatically terminate.
However, the Petitioner was still required to account for his dealings with the trust funds before seeking discharge. The court found that M's request to have the transferred estate to be held on bare trust until he turned 18 was "entirely appropriate" given that title to land in England cannot be held directly by a person under the age of 18. The court decided that the Petitioner was bound to comply with his instructions, as they are competent in law. The court also confirmed that the questions raised here were novel and so the Petitioner was entitled to his costs for bringing the Petition to the court out of the trust estate.
This is an interesting case highlighting some of the differences in Scots and English law relating to trusts and property ownership. Another point to note is that the deceased's former partner, M's mother, did not inherit any of his estate. They were not married, and he did not leave a will. There would have been scope for her to make a claim (of a capital sum or property transfer) as a cohabitant, but the outcome of that would have been dependent on the circumstances and at the court's discretion. If the deceased had left a will, which may have included provision for his partner and/or made provision for a trust for M's assets given his age, the administration of his estate may have been smoother for all involved. With this case in mind, it shows the importance of having an up to date will in place.
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