England and Wales High Court Allows Trustees to Treat Illegitimate Child as Beneficiary

Trustees of a very large family settlement have gained approval from the courts to include as a beneficiary a child born out of wedlock.
The case in question involves a multi-million pound family trust which was set up in 1968 for the benefit of the settlor’s children, remoter issue and their respective spouses.

According to the common law rules of construction, a child is legitimate only if the child is born or conceived in wedlock. Section 15(1)(a) of the Family Law Reform Act 1969, which came into force on 1 January 1970, changed this position however only for trusts which came into being after that date.

One of the beneficiary’s three children was born a month before their wedding took place and because the trust was set up prior to the law coming into force is not covered by the act.

The trustees were uncertain whether she qualifies as a beneficiary under the current trust, as the trust appointment does not contain any provisions concerning illegitimate children.

The trustees were proposing to execute a Deed of Appointment creating a new trust for a class of beneficiaries described as the “Discretionary Beneficiaries” defined as “…the children and remoter issue (whether legitimate, illegitimate, legitimated or adopted)….”

The trustees approached the court (a) to confirm that they had power to take the step they proposed to take and (b) to seek the court’s blessing on their proposed course of action.

The court weighed up all the information including a letter of wishes written by the settlor confirming it was what he had always intended.

The court was satisfied that the trustees have the power to execute the proposed appointment and that to do so would be a proper exercise of their power.

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