In the matter of the B Life Interest Settlement

No change could be made to the dispositive provisions affecting the life tenants without their consent in writing. In essence, what happened was as follows:-

(ii) The same day, the trustee made a deed of appointment in effect dividing the substantial asset of the Trust into three parts, such that the settlor would have a life income in one third, and each of the second and third respondents would similarly have a life income in one third.

Shortly after the execution of the documents, it was realised that the trustee had made a mistake. It had been intended that the first respondent would remain as a successive life tenant after the death of the settlor (but like him in respect of one third of the Trust only) but she had been excluded completely.

The intended effect was to transfer life interests in 2/3 of the Trust to the settlor's sons free of the life interests of the settlor and his spouse, thus creating new transitional interests under relevant UK tax legislation. The restructuring would reduce the value of the settlor's estate for the purposes of inheritance tax but would only be fully effective if the settlor lived for a period of seven years from the date of the restructuring.

In In the matter of the R Remuneration Trust [2009] JRC164A, the Royal Court was faced with an application by the trustee to set aside a trust and certain gifts to that trust on the grounds of mistake. In adopting the principles set out in In the matter of the A Trust , the Court said this:-