In estate planning, family members often have to act together. In order for them to do so, however, a strategy must be formulated and advice taken on it. This is often done by one person, often a father, to whom the rest of the family defer. That is natural but too much dominance and too much deference can be dangerous for it may vitiate the acts on which the strategy depends. On occasions, however, ignorance proves later to be bliss.
In the case of MacKay v. Wesley [2020] EWHC 3400 (Ch) a father decided to implement a tax avoidance scheme in which UK resident trustees were to be appointed to a formerly non-resident trust after it had realised a capital gain and distributed the disposal proceeds of £3.6m. Mrs MacKay acting on her father’s instructions, accepted an appointment as one of the trustees when the trust had only £61,000 in it. She was, as the High Court judgment records, ‘impecunious’. The tax planning having failed she found that, by virtue of her trusteeship, she was liable to a CGT bill of £1.6m. Fortunately for Mrs MacKay, the High Court found that her acceptance of the trusteeship was the result of the undue influence of her father and set it aside. In doing so the presiding judge said:
‘Finally, I should make it clear that I do not consider the fact that HMRC may lose a potentially valid claim for tax against the Appellant makes rescission [to grant Mrs MaKay’s application] unfair …’
