masthead picture for tqr issue 3 2023

Worthy or  unworthy?

Monday, 13 December 2021

We are all familiar with the distinction between legal systems that have forced‑heirship rules (civil‑law jurisdictions) and those that do not (common‑law jurisdictions). This is sometimes perceived as a Manichean dividing line, with freedom on one side and restriction on the other. Maybe less widely known is the fact that this separation is not always as strict as one may think, with certain areas presenting unexpected similarities.

As illustrated by Sidney Ross TEP, this is the case between elements of conduct that have influenced the outcome of claims by adult children under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) in England and Wales, and certain grounds for disinheriting adult children in civil‑law jurisdictions. At the heart lies the (common) concept that a de cujus is under a duty to cater for their close relatives after death, whether this be achieved by a system of compulsory shares or by a discretionary power of a court to alter the dispositions of a deceased person’s estate. After having tracked the roots of this concept back to ancient Mediterranean societies and shown how Roman law evolved in the same direction, the author presents an in‑depth review of the leading cases under English and Welsh law, both under the 1975 Act and before, including an analysis of the effects of Ilott v Mitson[1] on this jurisprudence.

The article precisely identifies the elements of conduct, both in terms of personal relationships and financial situation, which were relevant to the outcomes of the claims. It then goes on to compare these with the grounds justifying the disinheritance of an adult child and answers the question of whether such comparison can be used to help distinguish the deserving from the undeserving.

Moving to Italy, Professor Stefano Loconte TEP and Beatrice Molteni take us through what appears to be the first case of a decanting trust in Italy, a planning tool that is well known and commonly used in several US states. Although there can be many advantages in having an existing trust decanted into a new one, it is crucial to carefully examine the legal and tax consequences beforehand.

Italy has also been very active in adopting trusts and modifying its legal framework accordingly, as can be seen from the latest instalment of our ‘30 years of trusts’ series. Of particular interest are the various circular letters, rulings and court decisions on the taxation of trusts, which show the steady evolution in that area.

Also noteworthy is the constant evolution of the trust legislation in Malta, going back to the limited scope of the initial 1998 legislation, followed by the ratification of the Hague Convention on the Law Applicable to Trusts and on their Recognition in 1994, the Trusts and Trustees Act 2004 and, finally, the Trusts and Trustees (Amendment) Act 2014.

The England and Wales timeline highlights the interaction between changes to the trust rules and to the taxation rules, as well as the more recent anti‑money‑laundering and fiscal transparency rules. Of note are the decisions in Pitt and another v HMRC and Futter and another v HMRC,[2] which set a more stringent test for the correction by a court of trustee mistakes under the so‑called HastingsBass principle and prompted certain jurisdictions to specifically codify their diverging position.

[1] [2018] AC 545

[2] [2013] UKSC 26

Author block
The Editors

The content displayed here is subject to our disclaimer. Read more