How to deal with the estate in the trust when its purpose is no longer attainable?


(Jasontian78) #1

This is a simple testamentary trust in a will made in Hong Kong, and local laws shall govern.

The grantor left a share of his estate to his grandson for purpose of the latter’s colleague tuition. Here is what was written in the will “to my grandson xx, solely for his educational purposes when he reaches the age of 18 year old”.

However, due to the family feud, the trustee has not been able to cash in on one of the major real estate property located in mainland China, and thus the share that was supposed to be paid to the grandson has not been paid yet. Almost 10 years have passed and the grandson has already finished his colleague and started to look for a job now.

My question is: the purpose of the gift is no longer attainable and there is no gift over clause in the will, so how about the share that was intended for the grandson? In other words, shall the trustee still need to pay the share to the grandson now?

thanks in advance.


(Jasontian78) #2

Can anyone share a thought on this? Thanks.


(Jasontian78) #3

still waiting. Is this something too simple to ask?


(Nicholas Lepoidevin) #4

Well, here goes then. It is a kind of purpose trust; but the sole purpose is the benefit of an individual legatee. So it looks as if the legatee, as soon as he reached the age of majority (18 in Hong Kong), could have called for the share without being accountable to anyone for the way in which he spent it. Compare Re Bowes [1896] 1 Ch. 507, where there was a gift for the purpose of planting trees on a settled estate; it was treated as a gift to the persons entitled to the estate, whether or not they spent it on trees.

That is all subject to the requirements of the administration of the estate, i.e. until the estate was fully administered the legatee had a right to due administration but could not have demanded a distribution. Even so, if he was entitled to the share at 18 subject only to completion of the administration, it is difficult to see why delay should have deprived him of it.

But it is dangerous to offer a view on construction without seeing the whole will and any relevant factual context.

Nicholas Le Poidevin, Q.C.
New Square Chambers


(Jasontian78) #5

Millions of Thanks to you Nicholas.

As you can understand that I cannot disclose the Will at the moment. The administration of other estates outside of China mainland (including those in HK and UK) have been administered or executed already by the executor trustee. This particular estate is delayed simply because the estate property in China mainland is out of the jurisdiction by HK court and due the family feud, beneficiaries are not cooperating with each other.

So from your accounts, I understand that the share that is supposed to support the grandson’s college education won’t revert back to estate but can still be legally claimed by the grandson when reaching the age of 18, which is the case now.

Thank you very much indeed.


(Nicholas Lepoidevin) #6

The likely result is that the grandson is still entitled but in the absence of the will and the factual context this is obviously not formal advice.

Nicholas Le Poidevin, Q.C.
New Square Chambers


(Jasontian78) #7

thanks Nicholas, sure, I won’t take it that way.

It is most likely that we shall need a legal opinion to be presented to China court when the case comes to China court.

As I myself is tapping into estate planning services targeting Chinese rich families, i have been studying trust laws for some time, and found it a very interesting question. I didn’t realize that it is related to the majority of the grandson which will enable him to claim the benefits even though the stated purpose cannot be carried out any longer.