Beryl and Charlie hold the following property on trust for Charlie for life, remainder to Charlie’s issue: a collection of modern art; a diverse portfolio of shares in publicly quoted companies valued at £100,000 at the time the trust was set up in 2002; and cash to the value of £500,000 in an interest-bearing account at the Nat East Bank. The trust instrument prohibits the sale of the art collection. The following events have occurred.
(a) In 2010 the trustees sold half the portfolio of shares for £80,000 which they then used to buy a holiday home in Italy for Charlie’s daughter, Freda. The value of the property has fallen to £60,000 due to an oil spill which has despoiled the beaches in the region.
(b) In 2011, Beryl and Charlie agreed to transfer title to the remaining shares to Beryl, who is a stockbroker, and that her investment strategy would be to ‘go for growth’. Beryl sold the shares for £60,000 and invested the proceeds in shares in a Venezuelan fast food business, El Cobaya Muerta SA. The investment was very successful and in July 2015 the shares were valued at £100,000. However, in August 2015 the Venezuelan government nationalised El Cobaya Muerta SA and have paid the trust only £40,000 by way of compensation.
(c) In 2013 Charlie’s grandson, Peter, urged the trustees to sell the collection of modern art because he regarded all art produced since 1900 as decadent. The trustees decided to sell half the art collection to Damian, an art dealer, for £250,000. Amongst the paintings sold was a work, ‘Topaz in A flat’ by an obscure artist, Biancola White. Biancola White’s work soared in value following a successful exhibition in New York. Last month Damian sold ‘Topaz in A flat’ at auction for £500,000. The trustees decided to place the £250,000 realised from the sale of the paintings into the trust’s account with the Nat East Bank.
Advise the beneficiaries as to their rights and remedies against the trustees in connection with these transactions.
So Charlie is the beneficiary, the only one?
You cannot sell the modern art - what does this mean?
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- Thread Starter
- 23-08-2016 15:57