Can our father change an Irrevocable Trust?

by Readers Question

16:55 PM, 18th February 2020
About 6 months ago

Can our father change an Irrevocable Trust?

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Can our father change an Irrevocable Trust?

The question involves a trust set up by my father on his home. Please bear with me I do think it is important to put the background to the story in as it is quite complex.

My father set up a trust about 10 years ago. The purpose of this trust was to provide a home for my sister who is now 59.

On our fathers death the trust gave a lifetime tenancy to my sister.
The trustees of the trust were myself my brother and my father.
On our sisters demise the property was to go to my brother and myself.

My father is now 88 years old and is very frail.

The background to this is that my sister has always lived with my mother and father in the family home. There has always been a difficult relationship with our sister and other members of the family. She has always been extremely difficult to get on with. We believed it was because she had bouts of ill health which made it difficult for her to maintain relationships.

About six months after our mother died our father downsized and bought his present home. It was a smaller and more manageable house and he owned the property outright. Our sister had no financial interest in the property. He gave his consent and allowed our sister to live with him at this address without charging her rent. This house is now worth around £250k.

Our sister has not worked since her early twenties and her income has always come from government benefits. At great expense to himself and over many years he has bought, insured and maintained for our sister her cars, her clothes, her food and provided a roof over her head.

Over the years all the immediate members of his family were excluded from his home by our sister. This included myself, my brother, our wives and all his grandchildren who were unable to go to his house and visit him. She made it impossible for him to overrule her and was unreasonable to his wishes for her to let his family visit and he felt powerless to change her mind. The only way he could see other members of his family was to visit them in their homes.

This put a strain on his mental and physical health. He constantly made excuses for her behaviour. Eventually the strain got too much and he had thoughts of feeling suicidal and he was referred from A & E and admitted into a Psychiatric Unit in March 2015 for a period of two weeks. The Psychiatrist he was under told him that the biggest cause of his anxiety was the situation he was living in. He felt the pressure from living with our sister was the biggest cause of is anxiety and depression. He was discharged and went under the care as an outpatient of a community Psychiatrist who also believed his problems were ‘situational’.

Despite our efforts as a family to intervene by getting outside agencies such as social services involved, he continued to make excuses for her behaviour.

He now believes this was the wrong thing for him to do. He was being isolated and being kept alone a lot of the time. He visibly lost weight. He was constantly being bullied and shouted at. He was being financially manipulated and his mail especially his bank statements were being intentionally withheld from him.

He would give our sister £100 to spend on groceries and household expenses, such as cleaning products each week. She didn’t like to budget and became aggressive when he confronted her about going over budget. She would shout at him and he would often go into his room and cry. He eventually found multiple bank statements that went back over many months that were addressed to him in our sister’s room. He now realises for a long time our sister had been spending a lot of his money without his permission.

The situation came to a head on his 88th birthday. Our sister was drinking whisky heavily and her behaviour towards him was unacceptable and when he tried to remove the whisky bottle from her possession, she became aggressive and fought with him and he got hurt.

He immediately contacted us, and the police were called and our sister was arrested for a Section 47 Assault and Controlling and Coercive Behaviour and she was removed from the home.

He was so fearful of her returning to his house. This was a turning point for him, and he realised he could no longer live with her anymore.
He felt that he needed protecting from his daughter, so he applied to the Family Court and was granted an emergency Non Molestation Order and Occupation Order.

He now believes that our sister for many years has taken advantage of him, abused, isolated and stolen from him. She had not cared for him.

He has thought long and hard how to cope with this situation when making his will and at the same time be fair to his three children. However, he now cannot excuse nor will he now excuse our sister’s behaviour to him and all his family.

He now believes that the trust that he originally set up in good faith is NOT now both proportionate and reasonable.

Our sister has now been re-homed with the help of social services. She is living independently and still has this Non-Molestation Order and Occupancy order against her.

Our father has considered our sister and he is satisfied that she has been provided for. He also believes our sister would waste any additional money that she would receive if he now left any to her.

In conclusion he wants to change the terms of the trust so that the trust is ended.

He wants the house to revert to his ownership and he wants to make the sole beneficiaries of his house to be my brother and myself.

However, the solicitor who was acting for our father in this matter found that the trust had been put down as an ‘irrevocable trust’.

This was a complete surprise to my father who did not ask for this clause or had its implications explained to him at the time the original trust was taken out some 10 years ago. The original solicitors are no longer in business and their practise has now been purchased by another firm of solicitors.

An Irrevocable Trust is exactly what it says. It cannot be changed.

Our father is devastated. His new solicitor believes it is very unusual for a trust to be set up as an Irrevocable Trust. She suggested my father could ask a barrister who specialises in trusts to look at the circumstances of his situation to see if there were any grounds that would allow the trust to be changed or terminated.

The barrister’s verdict was that it couldn’t.

My question is this…….does anyone have a similar experience or can anyone offer advice as to how my father could CHANGE OR CHALLENGE the Irrevocable Trust?

Tony



Comments

Kate Mellor

13:18 PM, 19th February 2020
About 6 months ago

What a distressing situation for your father and your family Tony,
A Barrister will certainly be better placed to advise your father than anyone else I imagine.

The only possibility I can see, is a claim against your father’s original solicitor’s indemnity insurance. The new firm who took over from them, also takes on any liabilities they may have had (that is my understanding). Being 10 years ago though, you are quite possibly time-barred from claiming, you would need to check that. You would also need to check what documentary evidence your father holds for the instructions & advice given at the time.

Smartermind

16:38 PM, 19th February 2020
About 6 months ago

The barrister would know better, but surely a trust can be modified with a judicial modification, especially in this case if the daughter has been proven to be exploitative and abusive and has now been excluded from the house.

Dennis Leverett

17:59 PM, 19th February 2020
About 6 months ago

I'm no expert, but an irrevocable Trust is exactly that, irrevocable, what's the point of having one if it is not irrevocable.. It can only be changed if certain conditions for whatever reason were put in before it was signed by all. The father gave up his asset rights, often for tax reasons at signing, and changing it now could cause tax problems in the future. Also any changes would have to be agreed by all Trustees and Beneficiaries' and it's unlikely the daughters behaviour alone could change that as it's irrelevant to the original trust. Family's and money can often be a problem, it's a sad case, but based on info given here I feel it was very bad advice in the first place and most worrying thing is that if the father passes (apologies for bluntness) on soon there's nothing can be done. As I say I'm not an expert but in the past have purchased a few deceased/probate houses and seen the problems for family's who can't agree on anything. You need specialist advice ASAP.

Sam Addison

21:48 PM, 19th February 2020
About 6 months ago

It sounds as if your father downsized after the trust was set up. If this is the case I would look very closely as to what was left in trust. It may not be possible to void the trust but is it possible for your father to sell his house and buy the cheapest he can find in a rough area to fulfil the trust and meanwhile rent a nicer place to live in himself?

Dennis Leverett

10:37 AM, 20th February 2020
About 6 months ago

Reply to the comment left by Sam Addison at 19/02/2020 - 21:48
I may be wrong but I'm pretty sure he cant as with an Irrevocable Trust he has given up rights to any assets in it. This is why they are not that common anymore. I have used a Declaration of Trust a couple of times which worked out OK. Without seeing the actual Trust who knows.

Dennis Leverett

10:49 AM, 20th February 2020
About 6 months ago

Reply to the comment left by Dennis Leverett at 20/02/2020 - 10:37
Also, the daughter has a lifetime tenancy along with rights associated with that and once father passes on she may want to come back and spend the rest of her life there. I can't see any Judge rescinding based on her health problems and opinions from the brothers as they have much to gain and her much to lose. If I was in that position I would try and work out a satisfactory solution to all after the father passes on.

Dennis Leverett

12:40 PM, 20th February 2020
About 6 months ago

Reply to the comment left by Dennis Leverett at 20/02/2020 - 10:49
In 2005 I had a very expensive and painful divorce. The only way it could be resolved was through mediation and I managed to find a brilliant one, very expensive but brilliant at her job. Even my ex. got to like her!! She sorted it all out to the satisfaction of both of us. Perhaps you could consider this, the most important thing being to find a suitable impartial person to represent your sisters interests, some one who would have credibility in a court. Have a couple of meetings to test the lay of the land and listen to what she recommends. I would guess based on info given that your sister would probably welcome a cash settlement to give her some security in the future. Once the basics are sorted you could consult a Barrister or apply for an initial court hearing and the fact that you have gone out of your way to be fair to your sister would go down well. The reality for her is that if she moved back into the house or just left it empty I doubt if she could afford to keep it with bills etc. The downside is you could only do this once your father passes but could get prepared now. On here we are hitting in the dark because we don't know the contents of trust which is probably why very few have added anything. Message to Sam, I think he downsized before the Trust, another question would be what assets does the father have that aren't in Trust.

Paul Shears

15:58 PM, 20th February 2020
About 6 months ago

Reply to the comment left by Dennis Leverett at 20/02/2020 - 12:40
Excellent positive and pragmatic advice. 🙂
Very difficult and time consuming to find the right person with the necessary talents but not impossible. 🙂
As you say, the best time to start getting everything organised is right now.
This would maximise the chance of optimising the situation for all concerned.

Tony the hairdresser

21:27 PM, 20th February 2020
About 6 months ago

Thank you all for taking the time to post your thoughts. It has been a very distressing and troubling time for our family.
The trust was not set up for tax reasons as our father's estate was not large enough to warrant it.
Our father had set out to do the right thing. He planned ahead and made what he thought was a responsible and good provision that gave a home to our sister but protected the asset for the family in the future. He put his faith in his adviser. He seems to have been very let down not only by our sister but by the solicitor who set up the trust. It seems absolutely crazy to all of us that a solicitor would set a trust up without allowing any provision to alter it in the future.
As much as we need to do due diligence when dealing in any financial or legal transaction these schemes are very specialised and you hope the advise you receive is the very best and is in your long term interests.
Ticking the 'Irrevocable Trust' box and not the 'Revocable Trust' box was a very simple thing for the solicitor to do but the implications and the effects this will have in the long term have caused a lot of upset...(to say the least).

Mark W

12:11 PM, 22nd February 2020
About 5 months ago

Hello Tony,
My sympathy on this situation. My advice is to do nothing with regard to legal action. Your father is 88, just spend his final years keeping him as stress free as possible. Your sister is prevented from irritating him, that's a good thing. I hope you and your brother can keep calm and focus on your father's well being.

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