With all respect to the young Duke and his advisors, I am just finishing the written version of a Current Legal Problems lecture that I gave last year, which raises a series of questions regarding the validity of what I call in the paper “massively discretionary trusts”. (Cf the quotation in the Guardian article: “In a discretionary trust, you have a whole pick list of potential beneficiaries which the trustees can choose to appoint benefits to.”) I argue that these structures reflect misunderstandings about the nature the common law trust. The paper should be published during the autumn in the online version of Current Legal Problems, and then in hard copy later on.
Lionel





On 11-08-16, 14:16 , "Harrington Matthew P." <matthew.p.harrington@umontreal.ca> wrote:

For those getting ready to teach trusts in the new school year, there is an interesting, and very clear, example of the tax benefits of trusts in today’s London papers.

As many of you probably know, the Duke of Westminster died this past week. The third richest man in England, his ancestral estate includes a large part of Belgravia and Mayfair, and is estimated at around £9 billion. In fact, the Duke has the freehold on the land under the US Embassy.

Normally, such an inheritance would attract a 40% death duty (roughly £3.6 billion in tax). However, his lordship’s 25-year-old son and heir will likely pay almost no tax because the estate is structured as discretionary trust.

Two articles clearly explaining the problem (and showing the breadth of the London estate) can be found at:

http://www.telegraph.co.uk/tax/inheritance/inheritance-tax-and-how-the-dukes-of-westminster-avoid-it-on-the/

https://www.theguardian.com/money/2016/aug/11/inheritance-tax-why-the-new-duke-of-westminster-will-not-pay-billions

Although many students’ eyes glaze over when talk of tax comes up in the trusts course --- especially on the first day --- this case might drive home the point in an interesting and fun way.

Kind regards.


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Matthew P Harrington
Professeur titulaire
Faculté de droit
Université de Montréal
514.343.6106
matthew.p.harrington@umontreal.ca
commonlaw.umontreal.ca
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