Protecting properties for my children

Dear Mrs Macaulay,

I have several real properties with a mix of tenancy-in-common and joint tenancy, along with other assets. I have two children and would like to ensure that my wishes are meticulously followed and that they will be protected fully. Some of my concerns are as follows:

1. If I have a living revocable trust (versus a will) which was prepared in the United States (USA), can I include real properties, stocks, investments and other assets located in Jamaica?

2. Can such a document prepared under USA laws be enforceable in Jamaica to handle my wishes for assets in Jamaica?

3. Am I required under Jamaican law to utilise the services of a lawyer in the preparation of living revocable trust, if I have to prepare a separate document, or will which is not my preferred option?

4. What would be the best course in allocating properties that were created using joint tenancy and tenancy-in-common?

I would greatly appreciate your advice as I need to make some urgent decisions for the benefit of my children.

As a result of your intent, you have clearly been advised in the USA that you can have and execute a revocable living trust rather than a will (which you do not seem to find attractive) to effect your wishes about the management and/or disposal of your properties and estate.

So, regarding questions one to three, if you have a revocable living trust prepared in the USA, you can include whatever you wish in any deed with your directions. The issue is what effect will the relevant law have on such directions.

In a trust deed prepared in Jamaica, you can certainly deal therein with all your properties, real and personal. However, I must tell you up front that revocable living trusts are an American process. The English common-law and countries which inherited that form of common-law, those in the Commonwealth of Nations, do not have or recognise such a document or processes with the ‘living’ element/concept in them.

The main kinds of trusts recognised in our law and legal system are bare trusts; interest in possession trusts; discretionary trusts; accumulation trusts; settlor-interested trusts; non-resident trusts and implied or constructive trusts.

In trusts described as ‘bare’, the properties are held in the trustee’s name but an adult beneficiary (if the sole one named) is entitled to all the capital and income of the trust at any time. These types of trusts are mostly used to pass assets to young persons with the trustee securing them and looking after the assets until the beneficiary is old enough, or for adults for such periods as the trust deed specifies.

It seems from you letter that this is the kind of trust you wish to have — that which will enable you to hold the properties in your name with directive provisions for their passing after your death to your respective beneficiaries named in the trust deed.

In Jamaica we have the Trustee Act which has been in force here since 1897 and which was clearly inherited at our independence. It is the legislation which deals with the appointment and the powers and responsibilities of trustees and the powers of the court relating to the dealings of the trustees with the trust properties, and their liabilities if they act or invest the trust property improperly, as well as the court’s other powers.

The Act defines ‘trust’ as not including the duties incident to an estate conveyed by way of mortgage, but with this exception, the expression ‘trust’ and ‘trustee’ “include implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property, and the duties incident to the office of personal representative of a deceased person”.

We also have the Registration of Titles Act and the Settled Land Act which are also relevant to the issue of trusts and we, of course, also have common-law principles which apply.

I would not advise any client of mine in a situation such as yours to deal with their property and assets in a revocable living trust, but to either do a trust deed or their will which can include provisions for a trust and also therein directions for the appointment of a trustee in succession after the settlor/trustee’s death, to handle and effect the properties and directions for the trustee and beneficiaries, or for the executor(s)/trustees to effect such trust provisions in their will.

The only way a document prepared under USA laws can be enforceable in Jamaica is when the document fits into the legal requirements of Jamaican laws. If it is, for instance, a trust deed which follows all our legal principles, laws and regulations as to its contents and manner of execution, it may be enforceable here but a court may have to determine this issue.

In such cases, if a document is being prepared in a foreign country which will affect rights and obligations, land interest, etcetera, and is expected to be enforced in another country, it is always advisable that the maker/settler obtain the advice of a lawyer in the other country before signing such a document or deed.

You should therefore obtain the services of a lawyer here in Jamaica before you sign any document prepared in the USA to deal with real property interests in Jamaica. Remember also that in each country there are tax implications to be considered.

A Jamaican lawyer cannot prepare a revocable living trust, but a trust deed can be prepared relating to your Jamaican properties or your will with a testamentary trust or trusts, the appointment of separate trustees, the appointment of the executors as trustees, and embody therein the directions which you wish to have. I understand that you will be settlor/trustee and your will hold the properties in your name during your lifetime, for your benefit, and on you death, that of your beneficiaries.

Regarding your fourth question, you must remember in and under Jamaican law, when land is held by way of joint ownership, the joint owner does not own separate interests in the property but the parties hold the entire interest in the real property jointly. That is to say, they hold the interests together and when one dies, the survivor is entitled by operation of law to the entire property. The survivor merely notes the death of the deceased on the title whose interest therein is extinguished by the death.

If joint tenants wish to change the right of survivorship, then during their lifetimes they must agree to, or apply to the court to sever the joint tenancy.

So you cannot leave, give or divide any jointly held interest in real property to any beneficiary of yours because the law says you do not have a separate interest in the property and it passes on your death to your joint tenant survivor(s).

You can, however, dispose of your interest which you hold as a tenant-in-common because this you hold separately, and on your death it forms part of your estate which you can pass on to any of your beneficiaries.

Margarette May Macaulay is an attorney-at-law, Supreme Court mediator, notary public and women’s and children’s rights advocate. Send questions via e-mail to allwoman@jamaicaobserver.com; or write to All Woman, 40-42 1/2 Beechwood Avenue, Kingston 5.

DISCLAIMER:

The contents of this article are for informational purposes only and must not be relied upon as an alternative to legal advice from your own attorney.