A trust of land is when the legal title of a piece of land is held by one party, the trustee, on behalf of another party, who has the ultimate beneficial interest, known as the beneficiary. Depending on the circumstances under which the trust arose, the trustee may administer and even dispose of the land on behalf of the beneficiary, or they may merely hold the legal title until a time when the title reverts to the beneficiary and the trust comes to an end. A trust can arise in several situations, either expressly or impliedly.
When a trustee company holding land or property on trust is dissolved, the property does not automatically transfer to the beneficiaries. Instead, it typically passes to the Crown under a process called bona vacantia, meaning "ownerless goods". Beneficiaries or interested parties must take immediate action to restore the dissolved trustee company or appoint a new trustee to ensure the estate's assets are adequately protected
Can property held in trust revert automatically to beneficiaries?
No, property held in trust by a dissolved trustee company does not automatically revert to beneficiaries. However, if beneficiaries over the age of 18, have capacity, and together are absolutely entitled to all the trust assets, then they may agree to bring the trust to an end under the rule in Saunders v Vautier, but a court order is still required to action this.
Steps to take if the trustee company is dissolved
If your trustee company has been dissolved while holding property in trust, you should:
- Seek legal advice promptly to assess your options.
- Apply to Companies House or the courts to restore the dissolved trustee.
- If restoration isn't viable, apply to appoint a new trustee in place of the dissolved company.
- Ensure property title entries at HM Land Registry are updated to reflect any trustee changes.
Who owns land held on trust when a trustee dissolves?
If a trustee is dissolved, legal title to the trust property temporarily vests in the Crown under bona vacantia rules. The Crown holds this title until a trustee company is restored, a new trustee is appointed, or the beneficiaries successfully apply for the property's release.
Consequences of failing to restore a dissolved trustee
If no action is taken after a trustee company holding property is dissolved, the land remains legally ownerless and under Crown authority. This situation risks complications in property management, sale or financing, and can lead to significant delays and potential loss to beneficiaries.
Preventing future dissolution issues
To prevent issues arising from trustee dissolutions in the future, trustees and beneficiaries should:
- Regularly verify the status and compliance of trustee companies with Companies House.
- Maintain clear documentation of the trust structure and trustee responsibilities.
- Promptly address any notices or correspondence from Companies House relating to potential dissolution.
Can beneficiaries claim property from the Crown?
Yes, beneficiaries can apply to reclaim trust property from the Crown by bringing the trust to an end under the rule in Saunders v Vautier or pursuant to the terms of the original trust if they successfully restore the dissolved company. Legal assistance is advisable to navigate these procedures effectively and ensure property ownership returns to the intended beneficiaries without unnecessary complications or delays.
Comments