AN elderly couple were advised by lawyers to transfer £1.4 million into a Jersey trust which gave no tax advantages, tied up part of the family’s wealth for almost 15 years and left them with “significant fees”, according to a judgment.
In the latest in a series of similar cases involving the now-defunct legal firm Baxendale Walker – whose principals, Paul Baxendale-Walker and William Auden, were later struck off the register of solicitors in England and Wales – the Royal Court has declared the Craigmonie Hotel Ltd Commercial Security Trust void.
The couple – referred to as A and B in the court’s judgment – owned a hotel in Inverness which they sold for £1.4 million in 2003.
They were subsequently advised by Baxendale Walker to establish a trust in the Island to avoid or minimise the impact of inheritance tax. However, the way the trust was set up meant that not only would there be no tax advantages but that neither they, nor their children, would obtain any benefit from its funds.
Setting aside the trust, Deputy Bailiff Robert MacRae said the mistake made by the lawyers was so serious as to make it unjust that the trust should continue to function.
“The family and their children have been unable to access this significant part of their family’s wealth since 2009. They have incurred significant fees over the years, including the substantial fees paid to Baxendale Walker at the outset, without benefit. There will be a continuation in the incurring of fees unless the trust is set aside. There are no beneficiaries under the trust or other third parties who will suffer by it being set aside. Indeed, the trust in effect has no beneficiaries at all,” Mr MacRae said.
Advocate Frances Littler appeared for the company, owned since the death of the couple by their five children, to ask the court to declare the trust void.
Making that declaration, the Deputy Bailiff said it was clear that the couple would never have agreed to placing the funds in trust had they known what the consequences would be.
Jurats David Le Heuzé and Alison Opfermann were also sitting.
