Advise and explain if the following dispositions are valid.

Feb 15, 2024

Advise and explain if the following dispositions are valid.

Problem Questions:

  1. Nizam is executor of Liz’s estate with Mia as sole legatee. He is
    also trustee of a trust for the sole benefit of Isla. Advise Mia and
    Isla as to any claims available to them.
    On 1 February 2022, Nizam transferred £35,000 from the estate
    to his personal savings account (‘the Account’). At the time, the
    Account held a balance of £5,000.
    On 14 February 2022, Nizam transferred £10,000 from the
    Account to his girlfriend, Orla. Orla asked no questions and
    accepted the money, using it to clear her credit card debt.
    On 1 March 2022, Nizam transferred £20,000 from the Account to
    his brother, Jas, who innocently accepted the money. Jas used
    £10,000, along with £40,000 of his own savings, to buy a small
    commercial property which is now worth £100,000. Jas spent the
    remaining £10,000 on a trip to Las Vegas.
    On 10 March 2022, Nizam’s salary of £2,000 was paid directly into
    the Account.
    On 12 March 2022, Nizam took £10,000 from Isla’s trust and paid
    it into the Account. Nizam needed to obtain agreement from his
    co-trustee, Holly, to do this. Holly asked no questions and agreed
    to the withdrawal.
    On 15 March 2022, Nizam used £2,000 to buy an antique vase,
    which has now been valued at £20,000. Later that month, Nizam
    spent £10,000 on a weekend trip to Monaco.
  2. Advise and explain if the following dispositions are valid. If they
    are not valid, you must explain what will happen to the property.
    a) Ash and Brent are medical students who live together in a
    rented flat. Over the last year, both Ash and Brent have
    regularly paid money into a current account to cover
    household expenses. Brent has said to Ash on over twenty
    occasions: ‘don’t worry, the money in the account is as much
    yours as it is mine’.
    b) Years ago, Ash inherited some shares from his grandfather.
    The shares are held on trust for him by Shami. Ash wants to
    give Delilah some of his shares. Ash sends the following email
    to Shami: ‘Please give my shares to Delilah.’ Shami fills in a
    stock transfer form and sends it, together with the share
    certificates, to the company registrar. Ash is still the registered
    owner of the shares at the time of his death.
    c) Ash is walking to a lecture with his friend Estella when he is
    knocked down by a car. Ash hands Estella his mobile phone
    and says: ‘I don’t have much time. Look after this for me. If I
    don’t make it, keep it. The code to unlock it is 5830.’ Ash dies
    shortly afterwards.
  3. Bashir and Alice are trustees of a family trust. Bashir is a solicitor
    and Alice is a family friend. At the end of 2021, the trust fund
    consisted of £250,000 in a savings account generating 1.3%
    interest per annum and a freehold penthouse apartment rented
    out to tenants. The fund is held for Christine for life, remainder
    to his twin daughters Jessica and Diana. You are required to
    advise Bashir and Alice of their liability in each of the following
    scenarios.
    a) In March 2022, the lease granted to the tenants in the
    penthouse apartment expired and the trustees decided to sell
    it. Alice decided to buy the apartment. She paid the full
    asking price of £2,000,000 and the proceeds were paid into
    the savings account, giving a balance of £2,250,000. The
    apartment is now valued at £2,500,000. Christine is unhappy
    that Alice has paid so little for the apartment.
    b) In late April 2022, the trustees decided to invest some of the
    money in a unit trust and asked an independent fund
    manager, Hamza, for advice. Hamza recommended a unit
    trust and paid Bashir a commission of £10,000 to persuade
    him to manage the investment; the trustees invested
    £150,000 in the unit trust. The investment is now worth
    £155,000. Bashir used £7,500 of his commission to buy shares
    in a pharmaceutical company, which have now doubled in
    value. Bashir still has the remaining £2,500 of his commission
    in his personal bank account.

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