Image Credit: AI Generated
How did the High Court interpret the family’s trust documents
A judge at the High Court of England and Wales has ruled that a man could inherit from a £14.5 million family trust despite DNA evidence establishing that he was not the biological son of the millionaire businessman who created it. Which represented Edward in the proceedings, Stuart transferred shares in the family companies into a discretionary trust in 2003, according to Ellisons. The trust was created for his children, with assets worth approximately £14.5 million becoming the subject of the dispute. In his judgment dated 16 August 2024, Master Marsh examined the trust’s language alongside the circumstances in which Stuart had established it. The settlement had been established when Stuart and Patricia had been married for around 30 years. The settlement was established on 29 November 2003, with Stuart transferring shares in the family companies to its trustees. The assets included 1,094,536 A shares and 1,499,623 B shares in Kitfix Investments Ltd, alongside 1,338,972 shares in Kitfix Swallow Group Ltd, according to the High Court judgment. The combined value of those holdings was estimated at approximately £14.5 million.
it concluded that the circumstances surrounding the trust’s creation supported his continued inclusion as a beneficiary, according to Ellisons’ account of the judgment Although the court accepted that the younger brother was not biologically related to their father. Ellisons said in a summary of the judgment that there was no evidence that Stuart believed he had any other biological children apart from Jonathan and Edward. The dispute arose between two brothers raised together within the same family, after one challenged the other’s right to benefit from the trust. Both brothers worked within the family business, which subsequently separated into two groups of companies. Their connection to the business also became central to a family trust established by Stuart to protect his assets and provide for his descendants. The disagreement eventually placed the meaning of the trust’s wording at the centre of a High Court inheritance battle. England and Wales High Court. Image Credit: Wikipedia But the finding did not automatically decide whether he could remain a beneficiary. The court took into account the circumstances in which Edward and Jonathan had grown up and Stuart’s view of his family at the time he created the trust. Both brothers had been born to Stuart and Patricia while they were married and had been raised as their children. The judge also took into account that when the trust was created Stuart believed Edward was his son. Nor was there any evidence to indicate that he intended to treat the brothers differently in establishing the trust. The central issue was how the word children should be understood in Stuart’s settlement. Ordinarily, the term would refer to biological children, unless the document or its surrounding circumstances supported a broader interpretation. The judge considered the family’s background, the purpose of the settlement and Stuart’s understanding of his relationships at the time. Their sons were already in their early twenties, and there was little likelihood of Stuart having additional children. The judge also found no reason for Stuart to favour one brother over the other when setting up the arrangement. The judge recognised that the trust’s wording did not expressly identify Edward and Jonathan by name. Instead, it referred to the children and remoter issue of the settlor, leaving the class of beneficiaries open to future additions. However, the court considered that the circumstances surrounding the settlement were sufficiently clear to establish whom Stuart intended to include. Master Marsh decided that a reasonable person aware of the relevant background would understand Stuart to have meant Edward and Jonathan when referring to his children. The wording was not intended to mean Edward and Jonathan only if they were biologically related to him. By the time of the proceedings, the trust held substantial shareholdings in Kitfix Investments Ltd and Kitfix Swallow Group Ltd. The trust was discretionary, meaning its beneficiaries did not automatically receive fixed shares of its assets. Instead, the trustees had powers to distribute income or provide benefits to one or more people within the eligible class. It preserved his eligibility to benefit from the trust, rather than giving him an automatic entitlement to a defined portion of its value. The High Court’s decision meant Jonathan’s attempt to exclude Edward from Stuart’s settlement failed. The judge ruled in Edward’s favour on the central question concerning the meaning of the trust’s wording. You use AI every day. Now get your AI Quotient. Take the AIQ test.
Because he was not Stuart’s biological child, jonathan subsequently argued that Edward should not be entitled to benefit from the trust. DNA evidence therefore resolved one part of the dispute against him. Because Patricia was Edward’s biological mother, he would remain a beneficiary of her settlement even if excluded from Stuart’s.
The legal issue was not simply whether Edward had Stuart’s DNA, according to Ellisons. The dispute followed the discovery that Patricia had had an affair. The claim sought to exclude Edward from the discretionary trust, potentially removing him from consideration when trustees decided who should receive its assets. Edward argued that he was Stuart’s son, and secondly that the trust documents should be interpreted in a way that even if he was not Stuart’s biological son, he should still be included. The court also had to consider what Stuart intended when he created the trust and whether the term children and remoter issue was intended to include Edward. That distinction became decisive in the judgment. The judge found that Edward was not Stuart’s biological son. The judge also considered the difference that a narrow interpretation would produce between Stuart’s settlement and Patricia’s separate trust, which was established in materially similar terms. The court found that such unequal treatment would be inconsistent with the circumstances in which the two arrangements had been created.
The case, Marcus v Marcus [2024] EWHC 2086 (Ch), concerned Jonathan Marcus and Edward Marcus, who were raised as brothers by Stuart and Patricia Marcus. Stuart was a successful businessman who founded a toy business in 1962, which later acquired Sequin Art.