Providing for the Unrecognised

“I want to be sure she is alright.”

He is sixty-one and he has been sitting in the chair for some time before he says it. The facts have come out slowly and in no order: a household of nineteen years, two children who are certainly his and are on his medical card, a first marriage under the Act that ended in fact in 2004 and has never ended in law, and a house in Kaduna that she chose and he paid for and that stands in his name alone.

He has read enough to be frightened and not enough to be useful. He would like to know whether he can marry her, and whether it would help, and what would happen if he did nothing at all.

The answer to the first question is no, and to the second, not in the way he means. The answer to the third is contained in the eight essays that precede this one.

But there is a fourth question he has not asked, and it is the only one with a good answer. He cannot change what she is. He can change what she has.

(A constructed illustration. The pattern is ordinary; the person is not real.)

The register would not recognise her. So he built one that would.

The pillar of this series sets out what a trust is, and the seven-step architecture in the set-up cluster sets out how one is built. Neither is repeated here. This essay is about a single application: providing for a person whose relationship to the settlor the state will not certify.

The problem those eight essays describe has one shape. Institutions act on records. The records recognise a small number of statuses. A household outside those statuses is not disbelieved — it is unaddressed, because no institution has a field into which it fits. Every route examined in Sibling 01 is an attempt to persuade an institution to make an exception, after the death of the only person who could have explained the arrangement.

A trust does not attempt that. It works the other way round. It creates a record of its own — an instrument, a trustee, a defined class of beneficiaries — and it asks institutions to act on that instead. The bank deals with the trustee. The registry deals with the trustee. The family may believe whatever it wishes about the relationship; the family is not a party to the instrument and is not consulted by it.

Three properties make it fit this problem in particular, and they should be stated exactly.

It operates outside the estate. Property validly settled during the settlor’s lifetime does not form part of his estate on death. It is not distributed by the statutory scheme, by customary succession or by anybody’s arithmetic, and it does not wait for a grant of representation. The whole of the delay described in Sibling 08 does not apply to it.

It requires no status of the beneficiary. A beneficiary is not a widow, a spouse, a legitimate child or a member of a family. She is a person identified in a document. Nothing about her marriage, her ceremony or her acknowledgment falls to be proved, because none of it is the source of her interest.

And it exists before the crisis. The instrument is executed, the property is transferred, the trustee is in office. When the settlor dies, nothing has to begin — something continues.

A trust of this kind is not a form to be filled. Six decisions determine whether it does the work, and all six are taken at the drafting stage by people who are, understandably, thinking about something else.

A settlement made in these circumstances will be examined, and a practitioner should draft in expectation of the four attacks that are actually made.

That it was a sham. The allegation is that the parties never intended the trust to operate and that the settlor continued to treat the property as his own. It is answered by conduct rather than by drafting: the trustee is in office and acts, accounts are kept, income is received and applied by the trust, the register shows the trustee, and the settlor does not deal with the asset as though nothing had changed. A settlor who retains every power and every benefit has produced a document, not a trust.

That he did not understand it, or was pressed into it. Capacity and undue influence are the standard challenges to any lifetime disposition and they are more likely where the beneficiary is a person the family regards as an interloper. They are answered contemporaneously: independent advice given and recorded, a note of the settlor’s instructions in his own words, and, where age or illness is a factor, a medical opinion taken at the time rather than reconstructed later.

That it was made to defeat creditors. A transfer that leaves the settlor unable to meet his existing obligations is exposed, and no amount of drafting cures insolvency. This is a further reason for Decision Four’s rule about timing.

That it was made to defeat a spouse. This one must be stated carefully. A person may provide for whom he chooses out of property that is his, and doing so is not wrongful merely because it reduces what falls into his estate. But a settlement made during matrimonial proceedings, or shortly before them, in order to remove assets from the court’s reach, is a different matter and a court has powers directed at exactly that — the position described in Sibling 06. Provision made openly, years in advance, out of property genuinely the settlor’s own, is not that, and should not be drafted so as to resemble it.

The instrument is powerful within its limits and useless outside them, and the limits are worth stating plainly for anyone who has read this far with rising hope.

It cannot confer a status. A beneficiary does not become a widow, a spouse or a member of a family. She does not acquire the right to administer the estate, to be consulted about the burial, or to be treated by the family as anything at all. The instrument gives her property; it does not give her standing.

It cannot dispose of what the settlor does not own. Family property is not his to settle, for the reasons in Sibling 04. Property already held jointly, property of a company, and property subject to another person’s interest are all outside his gift.

It cannot be created after death. There is no instrument in this cluster that can be executed at a graveside. A will can direct that property be held on trust, which is a valuable thing and reaches only property in the estate; the lifetime settlement described here cannot be replicated by anybody once the settlor is gone.

And it cannot survive being left alone. A trust with a vacant trusteeship, unfiled accounts, unregistered assets and no one exercising the power of appointment is a liability rather than a protection. The set-up cluster’s essays on the administration rhythm and on why trusts fail are the maintenance manual, and they are not optional reading for anybody who builds one of these.

A status is conferred by an institution. A beneficial interest is conferred by a person — which is why one of them is available to him and the other is not.

This essay is a specification, not a build. Everything structural about creating the trust — the seven steps, the deed and its clauses, the choice of trustee, the cost, the incorporated-trustee question, the letter of wishes, the first year of administration and the ways trusts fail — is set out in the set-up sub-cluster, and everything about getting assets into it by asset class is set out in the funding sub-cluster. Neither is summarised here, because summarising them would produce a worse version of work that already stands.

What this cluster adds is the reason. The trust body was built to answer a question about wealth surviving a generation. It turns out to answer a second question, which is what a man does about people the law will not acknowledge are his to provide for.

The eight essays before this one describe, between them, a single failure repeated in different registers: a household that was real, an institution that could not read it, and a moment of loss at which the two facts met. In every one of them the same sentence is available at the end, and the sentence is the reason this cluster sits inside a body of work on trusts.

He could not make her his wife. He could make her a beneficiary. That is a smaller thing and it is the thing that was actually available, and a great many households have discovered too late that a smaller thing done in time is worth more than a larger thing never done at all.

What the law will not recognise, an instrument must provide for.