Best way to break a trust
JL writes: I have run a small family engineering business for a number of years with my brother, who sadly died last year. His shares in the business have been left in trust for his three children. Is it possible to break the trust and transfer the shares into the names of the children individually so that we can avoid having to deal with the complexity of the trust and the added administration?
It is possible to transfer the shares to your brother’s children as long as the trustees have the power in the trust deed to make such transfers, writes Chris Lane, a partner at Kingston Smith LLP. In addition, the children will need to be over 18 years old; otherwise, the shares should be registered in the name of an adult for the account of the child.
The trustees would need to sign a resolution agreeing to the transfer, and the share transfer forms would need to be completed to record the change of ownership in your company. There would also need to be a company board minute to approve the share transfer.
Of course, before distributing the shares, the trustees should carefully consider your late brother’s wishes as regards the shares and also whether there are any other reasons why the distribution of the shares to his children directly should not be made.