Children Born Out of Wedlock Receive Shares of £1.29 Million Trust Fund

Few people nowadays care whether a child is born within wedlock, but the law is in some respects behind the times. In a ground-breaking ruling, however, the High Court has opened the way for illegitimate members of an extended family to receive shares of a £1.29 million trust fund.

The trust was established by a member of the family in 1959. It identified its beneficiaries as the male descendants of the settlor's brothers and sisters. A further family trust made provision for female descendants. The trust identified a vesting day, 60 years in the future, when any money remaining in the fund would be distributed to beneficiaries. That date was fast approaching.

The word 'descendants' has always meant, in law, legitimate blood descendants. There were 30 beneficiaries who undoubtedly fell within that category. However, there were five members of the family whose status was in doubt because their parents were unmarried when they were born.

Concerned that they might be held personally liable were they to distribute shares in the fund to those who were not lawfully entitled to them, the trustees sought the Court's guidance as to whether the five fell within the class of beneficiaries.

Ruling on the matter, the Court noted that no area of the law of England and Wales, even the most seemingly traditional, is unaffected by the Human Rights Act 1998 and the European Convention on Human Rights, Article 14 of which bans discrimination on grounds of, amongst other things, birth.

The Court found that the Act could not retroactively change the class of beneficiaries at the point in time when the trust was created. However, once it came into force, it was capable of altering the members of that class. The ruling meant that the five – one of whom the Court found was in fact legitimate, his parents having married after his birth – were entitled to receive shares in the trust fund on the vesting day.

Another family member whose mother was adopted was also ruled entitled to a share, as was an unborn child who was not expected to be delivered until after the vesting day. The Court approved a schedule of beneficiaries presented by the trustees, thus giving them the security that they could distribute funds on the vesting day to all those named without fear of personal liability.

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