Missing trust deed? A Court could still find a way to disburse the funds

In a case concerning a lost trust deed, the High Court has granted a protective order allowing the executors of a deceased person's estate to distribute its funds.

Facts:

The claimants are the executors of the will of Patricia Fassam, who died in 2022 as a widow. She had two children, Mark, who predeceased her, and Jason, who survived her. 

They obtained a grant of probate and came into possession of £168,000, which represents the proceeds of a life assurance policy held in a trust the deceased established on 1 October 1987. The trust instrument itself cannot be found.

The executors believe the deceased intended to benefit her children, as she did in other, later trusts with known terms. They wish to pay the entire trust fund to Jason, but are seeking the Court's direction to protect themselves from any potential claims by other unknown beneficiaries. The claim was issued without a named defendant to get this direction from the Court.

Decision: 

The Court granted an order allowing the deceased's executors to pay a £168,000 trust fund to her surviving son, Jason, despite the trust deed being lost. 

The Court did not make a definitive ruling that Jason was the sole beneficiary of the trust. The Judge concluded that, while the family history and the terms of other, later trusts provided strong circumstantial evidence, it was not enough to conclusively prove the terms of the lost trust instrument. A positive order would have prejudiced the interests of any other possible beneficiaries not currently before the Court. Instead, the Judge relied on the legal principle established in the case of Re Benjamin. This principle allows a Court to grant an order giving trustees "liberty to distribute" a fund on a certain reasonable assumption, without conclusively deciding the rights of all possible beneficiaries. In this case, the assumption was that Jason was the sole remaining beneficiary. The order was seen as a practical solution to a difficult problem, as it is unlikely that anyone else will ever be able to prove a claim to the funds if the executors themselves could not.

The order provides a key benefit in that it protects the executors from any future claims that they misapplied the funds. However, the order does not destroy the rights of any other potential beneficiaries. The legal risk is simply transferred from the executors to Jason. While the Judge acknowledged this risk is modest, if another beneficiary were to ever emerge with a claim, it would be a matter to be resolved directly with the recipient.

Implications:

The case highlights a vital legal tool available to those administering estates or trusts. If a trust instrument is lost and the identities of the beneficiaries are uncertain, the executors and trustees are not forced to simply hold onto the funds indefinitely or risk personal liability by simply guessing whom to pay. Instead, they can apply to the Court for a Benjamin Order. This order grants them "liberty to distribute" the funds to the most likely beneficiary based on available evidence, while protecting them from future lawsuits for misapplication. It provides a safe and legally sanctioned path to proceed with distribution.

For beneficiaries, the case shows that an inheritance is not necessarily lost, even if the formal trust documents are missing. The Court can and will rely on strong circumstantial evidence, such as family history and other related documents, to infer the deceased's likely intentions. However, the case also carries a warning, as a Benjamin Order does not permanently extinguish the rights of any other potential beneficiaries – it merely transfers the risk of a future claim from the trustees to the recipient of the funds. While this risk may be small, it is not negligible.

The most important implication of this case is the powerful reminder it serves to everyone involved in estate planning – the critical importance of safeguarding legal documents. A properly drafted and securely stored trust instrument, will, or deed prevents the need for such complex, time-consuming, and expensive Court applications. The legal costs of seeking a Benjamin Order are a direct consequence of a failure to preserve essential documents.