Wright & Anor v Gater & Ors

Under section 1(1) of the Variation of Trust Act 1958, the court supplies an infant’s consent only where the proposed variation confers a real benefit. It does not redistribute the infant’s property according to a scheme preferred by the judge.

Financial benefit is assessed practically, including the advantages obtained, bargaining strength and relevant risks. Non-financial benefit requires particular caution. Postponing vesting beyond majority is not beneficial in principle. It must be justified by realistically assessed risks arising from the beneficiary’s characteristics, wealth, circumstances or family setting, and must be proportionate. A graduated entitlement may satisfy the test where it moderates genuine risks without unnecessarily impairing the beneficiary’s autonomy.

Edward Greenstreet died intestate, leaving his estate to his son Kieran. Kieran then died intestate, leaving the combined estates for his infant son Rory under the statutory trusts in the Administration of Estates Act 1925. A variation could avoid approximately £89,000 of inheritance tax.

Rory’s mother and another relative sought approval of a new trust postponing Rory’s access to capital until age 30 and providing extensive default trusts. The court declined to approve that proposal, principally because the evidence did not establish a real risk justifying such extensive postponement. A revised arrangement, providing staged access at ages 18, 21 and 25, was then considered. The central issue was whether that arrangement was for Rory’s benefit.

1. Statutory jurisdiction. Section 1(1) of the Variation of Trust Act 1958 permits approval on behalf of an infant only if carrying out the arrangement would be for that person’s benefit. The court supplies the infant’s consent; it does not exercise a general power to resettle or redistribute the property according to its own preferred scheme.
2. Assessment of benefit. Where benefit is financial, the court applies a practical and business-like assessment of the advantages, the parties’ bargaining strength and the risks assumed. Where benefit is non-financial, the assessment must be cautious so that it does not merely reflect the judge’s personal preferences. The relevant question may be whether a prudent adult, motivated by intelligent self-interest and having considered the proposed trusts, powers and circumstances, would accept the arrangement.
3. Postponement of vesting. The authorities show that postponement can amount to benefit, but they do not establish that postponement beyond majority is beneficial in principle. The court must identify realistically assessed risks, such as risks arising from the size of the fund, the beneficiary’s circumstances, personal characteristics or family context. The response must be sufficient and no more than necessary.
4. Application. The original proposal, postponing Rory’s entitlement until age 30, was unsupported by evidence of personal characteristics or circumstances creating a real risk. It also came close to resettlement and imposed an unjustified restriction on Rory’s future autonomy. The revised arrangement was a variation, not a resettlement. The projected access to approximately £750,000 at age 18, Rory’s family circumstances and the realistic risks of temptation or exploitation justified staged access. The revised arrangement proportionately addressed those risks and was approved.
5. Procedure. Approval should ordinarily follow a hearing with proper argument and evidence. A litigation friend promoting the arrangement cannot also provide independent scrutiny for the infant. Separate counsel for the infant is a fundamental requirement, and the interests of unrepresented beneficiaries require an effective watchdog or oversight role.