Re Osias Settlement

JurisdictionJersey
CourtRoyal Court
JudgeTomes, Deputy Bailiff and Jurats Picot and Myles:
Judgment Date19 January 1988
Date19 January 1988
ROYAL COURT
Tomes, Deputy Bailiff and Jurats Picot and Myles:

A.J. Dessain for the representor;

P.R. Le Cras for H.M. Attorney General;

R.V. Jeune for the adult beneficiaries;

J.A. Clyde-Smith for the minor beneficiaries.

Cases cited:

(1) Ball's Settlement Trusts, In re, [1968] 1 W.L.R. 899; [1968] 2 All E.R. 438; (1968), 112 Sol. Jo. 445, applied.

(2) Brook's Settlement, In re, [1968] 1 W.L.R. 1661; [1968] 3 All E.R. 416; (1968), 112 Sol. Jo. 845.

(3) Chapman v. Chapman, [1954] A.C. 429; [1954] 3 All E.R. 116.

(4) Druce's Settlement Trusts, In re, [1962] 1 W.L.R. 363; [1962] 1 All E.R. 563; (1962), 106 Sol. Jo. 112.

(5) Holt's Settlement, In re, [1969] 1 Ch. 100; [1968] 1 All E.R. 470; (1967), 112 Sol. Jo. 195, applied.

(6) Moncrieff's Settlement Trusts, In re, [1962] 1 W.L.R. 1344; [1962] 3 All E.R. 838; (1962), 106 Sol. Jo. 878.

(7) Pettifor's Will Trusts, In re, [1966] Ch. 257; [1966] 1 All E.R. 913; (1966), 110 Sol. Jo. 191.

(8) Seale's Marriage Settlement, In re, [1961] Ch. 574; [1961] 3 All E.R. 136; (1961), 105 Sol. Jo. 257, applied.

(9) Steed's Will Trusts, In re, [1960] Ch. 407; [1960] 1 All E.R. 487; (1960), 104 Sol. Jo. 207.

(10) T's Settlement Trusts, In re, [1964] Ch. 158; (1963), 107 Sol. Jo. 981; sub nom. Towler's Settlement Trusts, Re, [1963] 3 All E.R. 759, considered.

(11) Viscount of Royal Ct. v. Shelton, 1983 J.J. 53.

(12) Weston's Settlements, In re, [1969] 1 Ch. 223; [1968] 3 All E.R. 338; [1968] T.R. 295; (1968), 47 A.T.C. 324; 112 Sol. Jo. 641, dicta of Lord Denning, M.R. applied.

(13) Whitehead's Will Trusts, In re, [1971] 1 W.L.R. 833, applied.

(14) Wimborne (Viscount) v. Abacus (C.I.) Ltd., 1987-88 JLR N-22.

Text cited:

Underhill's Law of Trusts & Trustees, 13th ed., at 395, 397 (1979).

Trustsvariationscopecourt has discretion to allow total variation, e.g. conversion of Jersey trust into foreign trust if beneficial to minor, unborn and unascertained beneficiaries and exceptional circumstances disclosed

Trustsvariationscopecircumstances in which court will refuse to exercise discretion to vary

Trustsvariationpartiesall persons with potential interest to be convened in application to varyminor beneficiaries to be separately represented and preferable for unborn and unascertained beneficiariesadult beneficiaries to be own representors, allowing trustee to concentrate on interests of minor, unborn and unascertained beneficiaries

A trustee made an application under art. 43 of the Trusts (Jersey) Law, 1984, seeking the court's approval of an arrangement varying the trusts of two settlements governed by Jersey law so that all the trusts would be constituted under Florida law and the funds in Jersey transferred to trustees resident in the United States.

The settlor and her husband had been living in the United States but subsequently became non-resident. They each made identical settlements irrevocably settling assets situated in the United States on their own behalf and on behalf of primary, minor, unborn and unascertained beneficiaries, who were resident in the United States, so as to avoid US estate tax upon their death. Two companies were incorporated in Jersey for the purpose of holding some of the trust assets. The settlor subsequently assigned her interest in the settlement to the primary beneficiaries who, as US residents, would have been liable to pay US income tax on income earned by the companies despite the fact that the settlement made no provision for them to receive any distributions from those companies. In consequence, the Jersey trustee sought approval for an arrangement varying the trusts so that they would all be recognised and governed by Florida law and the assets transferred to trustees resident in the United States.

The trustee submitted that the holding of the assets in the companies was disadvantageous to the primary beneficiaries and potentially to the unborn and unascertained beneficiaries, whose interests he also pro- tected, since they would be liable to pay US income tax and that the holding of the trust assets for their issue on irrevocable trusts governed by Florida law would be for the benefit of all beneficiaries.

Held, granting the representation:

(1) The court could approve an application under art. 43 of the Trusts (Jersey) Law, 1984, for an "arrangement"giving that word a wide meaningvarying the Jersey trusts so as to make them governed by Florida law and transfer funds to trustees resident in the United States if (a) there had been a variation in substance which it had the discretion to approve, regardless of whether it affected the substratum of the trust, the only limitation on its discretion under art. 43 being that the arrangement must benefit minor beneficiaries and potential beneficiaries as yet unborn or unascertained who, unlike adult beneficiaries, were not sui juris and therefore needed the court's protection and (b) exceptional circumstances were disclosed. These conditions were satisfied in the present case in that the arrangement constituted a variation and was made in the exceptional circumstances of the United States being the natural domestic base for the trusts, all the beneficiaries being resident there. It would, moreover, benefit the minor, unborn and unascertained beneficiariesgiving "benefit" a wide construction, although in this particular case the court was concerned with financial benefitbecause, by minimising the penal effect of US tax laws, proper taxes would be paid, it being in the court's discretion to consent to a scheme even where it would result in tax avoidance (page 408, line 26 - page 409, line 15; page 410, lines 22-25; page 412, lines 21-34).

(2) Although the court could not provide a definitive list of situations in which its discretion to approve a variation would not be exercised, examples would be where the proposed arrangement was on behalf of a beneficiary who would never exist; where a power of appointment had been exercised purely to facilitate an application to have the proposed arrangement approved; and where the proposed arrangement attempted to protect the beneficiary against his own extravagance (page 411, line 39 - page 412, line 17).

(3) In an application to vary a trust all parties having an interest or a potential interest should be convened, separate representation being required for minor beneficiaries and, where there are unborn or unascertained beneficiaries and a potential for conflict between their interests and those of adult beneficiaries, then independent representation is preferable. The adult beneficiaries should, moreover, be their own representors in such circumstances, leaving the trustee to concentrate on his main role of protecting the interests of unborn and unascertained beneficiaries (page 402, lines 1-20).

TOMES, DEPUTY BAILIFF: These two representations were substantially in the same terms; they related to settlements made in the same form and bearing the same date; in general terms the trusts, the beneficiaries and the excluded persons were the same.

The only differences resulted from events outside the ambit of the deeds themselvesLeah Osias had assigned her interest in the Leah Osias 1980 Settlement to certain primary beneficiaries so that they, for present purposes, were in the same position as if she had died; Harry Osias had died on August 1st, 1981, which had the effect of speeding up the interest of the primary beneficiaries, which was now free of the life interest. The only other major difference was that the accounts for the two trusts differed. It was convenient, therefore, to hear the two representations together.

For purposes of convenience, we concentrate on the Leah Osias 1980 settlement.

The representation of Standard Chartered Trust Co. (C.I.)

Ltd., "the trustee," showed that

1. Richard Allen (or Allan) Osias, Joan Osias Hoffman and Martin Fred Greenberg are the primary beneficiaries of a settlement made between Leah Osias (the mother of Richard Osias and Joan Hoffman) and the trustee on December 8th, 1980.

A copy of the settlement was exhibited to us.

2. By cl. 2 of the settlement it was provided, inter alia, that the settlement was established under the laws of Jersey and it was declared that the proper law of the settlement was to be the law of Jersey and that Jersey was to be the forum for the administration of the settlement.

3. Prior to December, 1980, the settlor and her husband Harry Osias, the father of Richard Osias and Joan Hoffman, who had been living in the United States, became non-resident and were advised that they should each irrevocably settle certain assets situate in the United States, as by this means such assets would no longer be subject to US estate tax on the death of either of them.

A copy of the Osias' family tree and of that of the family of Martin Greenberg was exhibited to us.

4. On December 3rd, 1980, in anticipation of the execution of settlements by the settlor and Harry Osias, the trustee procured the incorporation in Jersey of two companies, namely Le Corbeau Investments Ltd. and L'Aiglon Investments Ltd.

5. Prior to December 4th, 1980 an engrossment of the settlement was prepared in the same form as a revocable settlement which had been executed by the settlor in 1978. The settlement was executed by the trustee in Jersey on December 4th, 1980 and was then delivered to the United States for execution by the settlor. Before the execution of the settlement on December 8th, 1980 by Richard Osias as attorney of the settlor, it was observed that the provisions of cl. 19 of the settlement were the same as the 1978 settlement which would have had the effect of making the settlement revocable.

Accordingly, as the US estate tax saving would not have been achieved by a revocable settlement, the settlor, by her attorney Richard Osias, simultaneously with the execution of the settlement, exercised her power under cl. 19(a) of the settlement to declare the settlement...

To continue reading

Request your trial
8 cases
  • I. Mubarik v A. Mubarak, The Craven Trust Company Ltd, S. Mubarak, N. Mubarak and Renouf
    • Jersey
    • Court of Appeal
    • 19 November 2008
    ...(15) Law, 1962 S.C. 500; 1962 S.L.T. 377, referred to. (16) N, In re, 1999 JLR 86, referred to. (17) Osias Settlements, In re, 1987-88 JLR 389, applied. (18) Phillips, 1964 S.C. 141; 1964 S.L.T. 286, referred to. (19) Saunders v. Vautier (1841), 4 Beav. 115; 41 E.R. 482; [1835-42] All E.R. ......
  • Representation of N, Re (Trusts: Variation: Benefit of Minors)
    • Jersey
    • Royal Court
    • 25 March 1999
    ...Fargus, In re, 1997 JLR 89, considered. (2) Irving, Re (1975), 66 DLR (3d) 387; 11 O.R. (2d) 443, applied. (3) Osias Settlements, In re, 1987-88 JLR 389, applied. Legislation construed: Trusts (Jersey) Law 1984, art. 43: "(1) Subject to paragraph (2), the court may, if it thinks fit, by ord......
  • The T Settlement
    • Jersey
    • Royal Court
    • 6 February 2002
    ...Re (1975), 66 D.L.R. (3d) 387; 11 O.R. (2d) 443, considered. (6) N, In re, 1999 JLR 86, considered. (7) Osias Settlements, In re, 1987-88 JLR 389, considered. (8) S Settlement, In re, 2001 JLR N [37], followed. (9) Tinker's Settlement, In re, [1960] 1 W.L.R. 1011; [1960] 3 All E.R. 85n, ref......
  • Mubarak v Mubarik
    • Jersey
    • Court of Appeal
    • 19 November 2008
    ...Trusts [1968] 1 WLR 899 . Re T's Settlement Trust [1964] 1 Ch. 158 . IRC v. Holmden [1968] AC 685 . In Re Osias Settlements [1987-88] JLR 389 . Trusts (Scotland) Act 1961. In re Steed's Will Trusts [1960] 1 All ER at 492 . In re Seale's Marriage Settlement [1961] Ch 574 . In re Holt's ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT