TACT THE ASSOCIATION OF CORPORATE TRUSTEES
Home Page Council Committees Members
Tracing Beneficiaries
Stephen Rigden
Research Director
Title Research
(From Issue 7,January 1999)
The article below provides us with a
view on the difficulties of tracing beneficiaries and the circumstances when a
professional genealogist services are of use. As
someone looking at one specific area of estate and trust administration the author reminds
of the practical difficulties and expense that can flow from trying to trace those
entitled to benefit
Despite the advances of modern
science, to the best of the writer's knowledge it is still not possible to control one's
financial affairs posthumously! However, in anticipation of and in preparation for death,
a will may be written, perhaps setting up a will trust, in an attempt to influence the
destination of worldly assets, at least in the immediate future following one's demise.
Title Research is an expert firm in its
specialist field of legal genealogy. On
behalf of our corporate trustee clients (as well as those in the legal and public
sectors), we identify and locate missing beneficiaries remembered in wills and the
potential heirs at law entitled upon the partial and full intestacies that arise for one
reason or another. As a result, we see wills of every cast and hue -. wills beautifully
crafted, efficiently thorough, merely indifferent and, it has to be said, occasionally
verging on poor. Through our experience and familiarity with the particular “missing
person” problems referred to us by our various banking and other clients, we have a
perhaps uniquely privileged overview and insight into how these are caused and how perhaps
they might be prevented. Hopefully, even the
most ostensibly self-evident of the comments in this article will not be amiss.
The field of will-writing has become
increasingly open to competition in recent years. Naturally,
solicitors actively promote their services and in recent years the Law Society has run its
"Make a Will Week" (for a while featuring the superhero “Will Power”,
who seems to have passed away intestate!), although the effectiveness of this campaign is
a moot point. However, "DIY" wills
are more and more common following the availability of inexpensive pro forma will-writing
packs in stationers. Latterly, firms of
will-writers have been entering the marketplace. Notwithstanding
the competition, a trust corporation can offer significant attractions in many instances. Not least, there is the comfort of feeling that
the will would be constructed carefully and that one's affairs are being entrusted to a
secure and relatively perpetual institution. In
addition, a corporate trustee will have significant in-house expertise and resources,
particularly to deal with incorporated company and overseas/ offshore assets, stocks and
shares etc, which are unlikely to be immediately available to the average high street
solicitor.
Where business is received, corporate
trustees have an important role to play in ensuring that the testamentary intentions of
their late clients are honoured and fulfilled as far as is possible. This role includes, prior to death, carefully
drawing up the will and then reviewing and revising it appropriately and, following death,
paying inheritances to the correct beneficiaries and establishing trusts.
A will is written at, and reflects, a
particular moment in the life of the customer. It
is, or should be, composed in contemplation of disposing of estate not at some distant
futurity but tomorrow should some fatal accident befall the customer once he or she has
attested their will. In most cases, of
course, wills are not written on deathbeds; nor does the testator die on lodging the
signed will at their bank and stepping back out into the high street. Usually between the
will being attested and the death of the testator, a long time passes; and it is a fact of
life that over time people tend to lose touch with one another, to move house, to change
their names and, ultimately, to die. As a
result, with each passing day every will runs an ever-increasing risk of being overtaken
by events, as few nominated beneficiaries are permanently sedentary and none is immortal.
A corporate trustee assisting in the preparation of wills can never entirely eliminate
this problem but it can help keep them to an absolute minimum. As always, the maxim that
prevention is better than cure holds true and the corporate trustee charged with drawing
up a will for a customer and being appointed as executor has the opportunity to make its
own subsequent job of administering the estate that much easier by careful drafting.
The first and very basic principle is
that names alone are seldom sufficient to identify a beneficiary. To leave one quarter of one's residue "to
Jane Smith" is potentially to leave behind a quandary -. what is there to distinguish
the intended beneficiary from other persons of the same or similar name? At the very least there should be two descriptors
-. the relation and current address. To name
the residuary beneficiary as "my niece Jane Smith of 110 Main Road, London N1
3BG" is an immediate improvement. Even
this can be bettered -. for instance, by stating " Miss Jane Smith of 110 Main Road
... daughter of my late brother William Smith" it is possible to differentiate
clearly between the true subject and any other niece of the same name (this being a not
infrequent necessity in large families and/or where traditional family naming patterns are
involved).
Even where there is no blood
relation, a non-ambiguous description can be important.
A term such as "sister-in-law" has multiple meanings. It could refer to the wife of a brother; to the
sister of a spouse; or even, when used more loosely, to the sister of a spouse of a
sibling or spouse. There is also no harm in
styling other beneficiaries as, for example, "my former neighbours", "my
ex-colleague and dear friend" or "my godchild". Sometimes such seemingly insignificant details not
only humanise a will but also have assisted in finding the right beneficiary.
Sometimes, it has to be said that the
details contained within a Will are woeful. One of Title Research's most challenging cases
in recent years was to find a residuary beneficiary described only as "Joy in
Australia", without any indication as to relationship, surname, age or specific last
known address. Through enquiries of former
neighbours of the deceased, we were able to confirm that Joy was a niece. Thereafter through systematic enquiry and
concerted effort we recreated the deceased’s immediate family tree, documented the
birth and marriage of Joy and, ultimately, determined her current residence in Western
Australia. She was then able to furnish evidence to support our findings that she was the
beneficiary sought.
In addition to the testator
adequately describing the beneficiaries, it is important to consider all possible
eventualities and to cater for them through reasonable substitution provisions in the
will. Title Research is referred many problem
cases where no such gift-over has been considered and the residuary beneficiary has
predeceased, triggering a partial or even a full intestacy.
It then becomes necessary to account to all the statutory next of kin. This can present a major problem where there is no
close kin and the interested parties are in the class of uncles and aunts and their issue
upon the statutory trusts. An extended
investigation may ensue, sometimes leading to 50 or more claimants being discovered. The uncles and aunts of a person dying at the age
of 75 years today would in most cases have been born in, say, the 1880s or 1890s, a period
when mean family size was much larger than it is these days. More than a century has elapsed since, during
which time the family has had much opportunity to disperse widely. Even where there has been no emigration, in our
experience it is very unusual to find a family still intact and whose members are all in
contact with one another nowadays.
The matter of failed gifts introduces
the importance of reviewing a will periodically and revising it as appropriate. If the aforementioned Jane Smith dies in the
lifetime of the testator, it is imperative that the will is looked over, even if only to
confirm that adequate provision exists already for this contingency. If it does not, either the will should be
rewritten substantively (should the testator regard the death as calling for a
wide-ranging overhaul and reallocation of benefit) or a codicil added to reassign the
particular interest (should the testator feel that the death affects only the one
residuary or pecuniary legacy in isolation). Other
events in the life of the testator or of his or her beneficiaries should also prompt a
review of the will to ensure that it makes adequate provision -. for instance, the
testator’s own divorce, the birth of a grandchild or even the beneficiary Miss Smith
changing her name by marriage or moving to a new address.
Corporate trustees can thus avoid
many later difficulties for themselves as executors by ensuring the use of adequately
detailed descriptions of beneficiaries and preparing for various contingencies at the
will-drafting stage and by encouraging periodic review of an existing will. The adherence
to pre-set quality control standards will assist in the first regard; whilst with the
computerisation of client details it has become a relatively straightforward
administrative task as well as best practice for a corporate trustee to issue reminders in
the manner of dentists and opticians exhorting patients to come in for a check-up!
Class gifts -. to a group of unnamed
individuals, such as "my nephews and nieces equally" -. are seldom included in
contemporary wills, a development which we would encourage having experienced some of the
difficulties they cause! The most unfortunate
case that we have witnessed was one where the residue was left by a testator to his
"cousins" without any precise qualifier. Common
sense could suggest that he had meant only his surviving first cousins, as his
contemporaries, to benefit. But what of the
children of predeceasing first cousins or, for that matter, the children of surviving
first cousins? Or second cousins? All such
persons are cousins and conceivably could make a claim.
In the particular instance in question, the opinion of counsel was sought and,
following a substantial investigation, a distribution was made using the intestacy rules
as a model. First cousins once removed benefitted under the principle of representation
where their parent, the first cousin, had predeceased the deceased but not where their
parent survived; and whole blood kin benefited to the exclusion of those of the half
blood.
Sad to say, on rare occasions
problems arise through simple carelessness. One
will we came across last year -. thankfully composed in the 1960s and clearly not reviewed
since -. notoriously announced that the residue was to be divided into 10 equal shares but
then proceeded to name only nine residuary beneficiaries!
The remaining one-tenth share defaulted and had to devolve upon intestacy. Once
more, there being no close kin, we had to embark upon an extended investigation.
Some problems, of course, are not
attributable to the original composition of the will. In many cases, financial
considerations impel the corporate trustee as executor into a situation where a view has
to be taken on whether to search for a particular missing beneficiary. For instance, a pecuniary legacy of £100 in a
1965 will may have seemed generous at the time. However,
upon the death of the testator today, the will not having been revised to take into
account inflation in the interim, the gift is modest and unfortunately troublesome as, of
course, the chances of the intended recipient having removed several times, or having
died, are high. Furthermore, the cost of the
research needed to find the person, or to prove their prior death, may be disproportionate
to the value of the legacy itself but perhaps not to the overall size of the estate.
Executors then have to use their judgement and discretion to reach a sensible decision,
balancing their obligation to the missing beneficiary against their duty to the estate as
a whole.
Most executors take the view that the
legacy itself should suffer no abatement -. i.e. that the beneficiary once found should
enjoy the stated £100 without any costs having been deducted. However, at the same time the majority of
executors feel that research costs should not exceed the legacy itself, even in the
largest estates. A point to remember here is
that the research required and its cost remain the same irrespective of the sum at stake. Accordingly, common sense ought to apply. In other words, it could be appropriate to spend
up to £100 if necessary to satisfy a £100 gift, or up to £500 to pay out £500.
Contrarily, in most circumstances, it would be neither appropriate nor necessary to expend
more than at the very most, say, £2000 trying to satisfy a £10,000 legacy before
arriving at the point at which it can be said that all reasonable worthwhile efforts have
been made in an endeavour to fulfil the fiduciary duty.
The increased centralisation of the
trustee and executorship offices of many trust corporations has been undertaken, partly at
least, to achieve efficiencies. Continuing
with this objective in mind, it would seem appropriate for corporate trustee executors to
act decisively as soon as it becomes apparent that there is a missing beneficiary problem
which cannot be resolved internally and to refer the matter to experts. Title Research deals almost exclusively with trust
and estate matters and, as a specialist, has the necessary detailed contextual knowledge
of succession law, a proven systematic approach to problem-solving and an understanding of
and ready access to the best resources. In
the first instance, on receipt of relevant details of the problem, a free assessment and
estimate is prepared by return, so that an informed decision can be made on what action to
take. There are no obligations entered into
at this stage, nor are costs incurred. Sometimes
the recommendation is that no work is attempted because, in our opinion, there are not
affordable genuine prospects of success. However,
where the matter appears amenable to research and instructions are issued, the trust
corporation has the comfort of knowing that the out-sourced task is being dealt with
efficiently and expeditiously, freeing them to focus uninterruptedly on other aspects of
the estate administration.
Particularly with the increased
availability of computer resources over the last decade, even apparently insoluble
problems can often be resolved surprisingly swiftly and at modest cost using in-house
resources. Occasionally, a busy general
practice solicitor’s office will present us with a case which has suffered not so
much neglect as a non-focused approach to a problem which ideally requires specialist
attention. When a successful result is returned to the firm within a matter of days, there
tends to be amazement as well as gratitude! The
centralisation or regionalisation of the majority of trust corporation executorship and
trustee departments seems to have produced a concentration of experience and expertise,
with the result that we encounter the problem just described less commonly with corporate
trustees.
In conclusion, corporate trustees
have much to offer many sectors of society, perhaps with particular reference to
"Middle England" and people with more complex affairs involving a mixture of
business and private assets. With their
stability, in-house specialist resources and internal (as well as external) governance, it
has always surprised us that their share of the trust and probate market is not
considerably larger.
© Stephen Rigden April
1999
Title Research
Home Page Council Committees Members