Discovery of trust saves woman more than £1.4m

The discovery that a grandmother had set up a trust relating to a house has saved a woman more than £1.4m.

The court heard that the house had been bought by the grandmother in 1986 as a home for her son, his wife and their three children. The son and wife separated later that year and the son never returned to the house. However, the wife and children continued living there.

In 1995, the grandmother began legal proceedings for repossession of the house. Those proceedings were drawn out over 10 years until in 2005, the court made an order stating that the wife had no beneficial interest in the house. She and the children then moved out and the house was sold for £3.2m.

The wife was ordered to pay the grandmother £1.4m plus interest to cover her occupation of the house since 1989 under legal principle of mesne profits, which relates to the profits that have accrued during a dispute over the ownership of property.

The grandmother died in 2009. In 2012, the wife and the children discovered that she had signed a trust deed relating to the house in 1986.

The house was held on the terms of the deed of trust until it was sold. The named beneficiaries were the children and their father.

The wife and the children applied to the court for the order relating to the payment of £1.4m to be set aside on the grounds of fraud on the grandmother’s part. They said she knew that she had signed the trust deed making the children beneficiaries yet she had concealed that from the court.

The court agreed that the grandmother had made misleading statements and the court order relating to the mesne profits should not have been made and should therefore be set aside.

Please contact Nic Pestell if you would like more information about the issues raised in this article or any matter relating to trusts and inheritance law.