‘Spouse’ versus being a ‘named’ beneficiary
The Trust was a discretionary Jersey trust, and its beneficial class was described as being (i) the settlor, (ii) the settlor’s spouse, and (iii) the settlor’s children and remoter issue.
The wife asked the trustee to appoint her as a beneficiary in her own name because of concerns that should the husband/settlor (who was in ill health) die then difficulties may arise as to whether she would remain a beneficiary under the term ‘spouse’. To avoid such issues and the potential for delay and costs, the trustee was asked to appoint the wife as a beneficiary in her own name.
As an aside, the wife sought assurances that the husband would not apply for the pronouncement of the Decree Absolute, which might have resulted in the wife ceasing to be a beneficiary as she would no longer technically be the husband’s spouse. The husband agreed that the Decree Absolute should not be sought until the issue of the wife’s status as a beneficiary was resolved. Once resolved, the Decree Absolute was sought and obtained, which gave the wife further comfort because her financial ancillary relief application would remain before the Family Court even if the husband died, as opposed to the risk that if the husband died prior to a Decree Absolute then the wife would be a widow and her claims would fall to be dealt with as part of her late husband’s estate.
The trustee took the position that it was not prepared to appoint the wife as a beneficiary in her own name, save if the husband were to die. As the Trust Court noted, if the husband were to die the wife would possibly “then be an outsider to the trust and would face the prospect of having to fund an application as an outsider to be readmitted into the beneficial class. The financial implications to her could not be more serious.”
The Trust Court “could find no good reason for not appointing her a beneficiary in her own right now and every good reason to do so, namely to secure her position within the beneficial class…” and concluded that the trustee’s “decision not to appoint [the wife] a beneficiary in her own right was a decision that no reasonable trustee would make.” Accordingly, the Trust Court set aside the decision of the trustee not to add the wife as a beneficiary in her own name and directed that the only reasonable decision would have been to appoint her as a beneficiary in her own name.
The wife’s concern about how precarious her position was in relation to the Trust was not appreciated by the trustee, or the other parties who chose to side with the trustee by effectively objecting, or ceasing to provide consent, to the wife’s request to be added as a beneficiary in her own name. This was dismissive and raised the temperature of hostilities between the two sides. Ultimately it took the extreme and unusual step by the wife of having to apply to the Trust Court to resolve what should have been a non-contentious issue, as there was found to be no good reasons for not appointing the wife as a beneficiary in her own name. This was another staging post for the wife, following a hard-fought battle.
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