Unscrupulous ex, divorce and inheritance

[maddiemay]

Nah, he wouldn't go to the trouble of trying to make it realistic, he's a big one for burying his head in the sand and hoping it turns out okay.

I have googled the solicitors name, it might be that he's retired or I've got the name wrong, I wish I had paid more attention to the subject when FIL was talking to me about it.

 

Ex is a master manipulator, but also very hated by his dad's friend so I'm hoping with him there at the 'impromptu' meeting he won't be able to manipulate his sister, son, nephew and niece, and be exposed for the cheating ****** he is!

Grateful for all your thoughts, it's very interesting

[stu007]

Couple of links for you.

 

Wills, probate and inheritance: https://www.gov.uk/wills-probate-inheritance

 

Wills and Probate Checklist: https://www.thegazette.co.uk/wills-and-probate/what-to-do-after-someone-dies

[maddiemay]

Thank you for the links Stu, I had already read that and many other articles, but until we know exactly what is going on its hard to know how to proceed.

It seems that one of the other beneficiaries has already consulted a solicitor having become suspicious long before we did.

 

All beneficiaries want the deceased's friend to be executor and all assets sold, then they need never have any contact with the crooked family member again.

Given the business side of things, if the assets are not sold he will be very much a part of their interests, given he is a director.

I have a suspicion that the assets may be held on trust until the death of both, of the deceased children (my ex & his sister)

Ex will be on a win win if that is the case, he'll be able to pay himself a nice monthly salary and or dividends and invoice his own partly owened company for work he hasn't actually done!

Anyone know anything about assets held in a trust??

[BazzaS]

Anyone know anything about assets held in a trust??

 

Assets "held in a trust" are actually "held ON trust" by the trustees. The trustees hold the 'legal title' to the assets, but hold them on behalf of the "beneficial interest" of the beneficiaries (to whom the trustees hold a 'fiduciary duty').

 

Where it gets more complicated is where the beneficiary doesn't immediately get the asset, where they may have a 'vested interest' (where they will definitely receive the asset, but it is a question of when) where they may have an interest 'vested in possession' or 'vested in interest'

https://uk.practicallaw.thomsonreuters.com/9-383-4027?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

 

or a 'contingent interest' (discussed on the same page).

 

I have a suspicion that the assets may be held on trust until the death of both, of the deceased children (my ex & his sister)

Ex will be on a win win if that is the case, he'll be able to pay himself a nice monthly salary and or dividends and invoice his own partly owened company for work he hasn't actually done!

 

As a director, invoicing his own partly owned company for work not actually done is a breach of his fiduciary duty as a director, and the company can 'hold him to account' (wheer he pays back the company for the money unjustly taken). Shareholders can force this to happen if the directors of the company won't, though the process is more convoluted.

 

As a director, he can't pay himself dividend unless he is also a shareholder, and then all the 'ordinary' shareholders must be paid the same (based on share), in other words 'x pence per ordinary share' not 'x pence per share for his ordinary shares, and y pence per share for the other ordinary shareholders"

 

The shareholders can remove a director, according to company law (potentially modified by caveats in the company's articles of association).

 

The beneficiaries should be seeking legal advice, and making their wishes known to the trustees(who themselves should consider taking legal advice if they aren't 'professional trustees', else they could be liable for losses to the beneficiaries!).

 

The trustees don't have to follow the beneficiaries wishes, but:

a) must consider them, and

b) must act in the interests of the beneficiaries, even against the trustees own interests or the interests of a third party.

[maddiemay]

Well apparently it's kicked off tonight, he knows everyone is on to him and is playing the I want to keep the business (only 25% is his) and have an income card, not sell everything and give everyone their lump sum. All parties involved had to remind him it's not what he wants that matters!

What a piece of work he is!

 

Iam so glad I'm not the one in his house tonight trying to stop him throwing things around in temper and being blamed for his shortcomings, 20 years was enough!

 

I'm guessing because of his reluctance to apply for probate, the valid will is the one he's not in, which of course is not good news for me in the divorce settlement but thats fine, I have a job I enjoy and my lovely children, no amount of money can buy that!

 

Just one question, if he and his sister are directors each having 25%, how could the beneficiaries sell the assets?

 

Thank you all for your interest.

[BazzaS]

Just one question, if he and his sister are directors each having 25%, how could the beneficiaries sell the assets?

 

Are they both shareholders with 25% shareholding?

 

If so, they can (together!) block any shareholders decision that isn't the status quo.

 

If the holding is 25%/25%/50% (others) : if the sister holding 25% sides with the other shareholders, they can force through shareholders' resolutions against the will of the ex (holding 25%).

(Both ordinary resolutions and special resolutions)

https://uk.practicallaw.thomsonreuters.com/4-107-6940?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

 

https://uk.practicallaw.thomsonreuters.com/9-107-7287?originationContext=knowHow&transitionType=KnowHowItem&contextData=(sc.Default)&firstPage=true&bhcp=1

 

The sister does this by:

a) for the resolutions if she sides with the ex, if the "show of hands" goes against the ex, they insist on a "poll vote" where the vote goes on the percentage of shares held, and they hold 50%. This can block ordinary resolutions (50% + 1 share needed) and special resolutions (75% needed)

b) for the resolutions where she goes against the ex, it doesn't matter if the ex insists on a poll vote if he can only muster his 25% (if he gets any other single vote he can defeat special resolutions).

[maddiemay]

Wow Bazza! That's like a different language to me

The deceased holds 52 ordinary shares, and the crook and his sister hold 24 ordinary shares each

What does that mean, and who does the 52 shares belong to now?

[BazzaS]

Wow Bazza! That's like a different language to me

The deceased holds 52 ordinary shares, and the crook and his sister hold 24 ordinary shares each

What does that mean, and who does the 52 shares belong to now?

 

The 52 shares belong to the beneficiaries of his will (according to how the will states they should be distributed), or to the trust created by the will if he has willed them into a trust (where they would be held by the trustees, on behalf of the beneficiaries) .......

 

There are 2 types of shareholders resolutions : ordinary resolutions and special resolutions.

Some of the more "nuclear options" (e.g. winding up a company) are set as needing special resolutions by the various Companies Act, and others can be made to require special resolutions under the company's articles of association.

 

Special resolutions need at least 75% of the votes.

Ordinary resolutions need "a simple majority:, so not 50%, but 50% + a single share (making the opposition not 50% but at most under under 50%).

 

Votes can start off as "show of hands", but can then be made into "poll votes" based on shares held. Any shareholder who holds at least 10% can insist on a poll vote.

 

So, for sake of example:

Mr Bloggs holds 55% of shares, and C,D,E, F, G, H, I, J and K hold 5% each (the other 45%). 10 shareholders in total.

 

Mr Bloggs puts forward an ordinary resolution. The others don't like it, and there is an initial "show of hands" vote: 9-1 against Mr Bloggs. The ordinary resolution would fail.

So, Mr Bloggs insists on a poll vote, and the vote is 55% to 45% ; the ordinary resolution passes.

 

Mr Bloggs moves on to a special resolution he wants. He has persuaded C, D, E and F to vote with him. G, H, I, J and K are against it.

show of hands: 5 to 5. Mr Bloggs would need it to be 8 to 2 ('at least 75%) to get it on 'show of hands", so he again calls for a poll vote:

Poll: 75% to 25%, special resolution passed.

If any one of C, D, E or F could be persuaded to vote against the special resolution : Mr Bloggs wouldn't get his way (show of hands 6 to 4 against him, poll vote 70% to 30%, neither giving Mr Bloggs his required 75%)..

 

So, returning to your family's situation:

Let us assume that the 52 shares previously held by the deceased get voted as "one block".

 

Ex can't block ordinary resolutions even if he has his sister on board (show of hands would be 2-1 against, but poll vote would be 52 to 48).

 

Ex can only block special resolutions if he has the sister on board (show of hands would be 2-1 against and poll vote 52 to 48, neither reaching the 75% needed).

|He can't block special resolutions if the sister votes against him (show of hands would be 2-1, not reaching the 75% needed, but either sister or the holder of the 52 shares calls for a poll vote, and it goes 76 to 24, the ex's 24% not being enough to prevent the 75% target being reached).

 

So, the sister is the key!.

 

However, the block of 52 shares can remove the ex from being a director. This is because this can be by an ordinary resolution, and it can't be made to be required by a special resolution.

[BazzaS]

So, the sister is the key!.

 

At least for those things requiring a special resolution.....

 

However, the block of 52 shares can remove the ex from being a director. This is because this can be by an ordinary resolution, and it can't be made to be required by a special resolution.

 

The relevant legislation being S168(1) of the Companies Act 2006.

"A company may by ordinary resolution at a meeting remove a director before the expiration of his period of office, notwithstanding anything in any agreement between it and him."

https://www.legislation.gov.uk/ukpga/2006/46/section/168

Removing ex from being a director would be a step towards getting the business sold. Caveat: things get more convoluted if there is also a "shareholders agreement" requiring all the shareholders to agree on sale of the business.........

[maddiemay]

Thanks Bazza, some bits sort of make sence, from the sounds of things all parties just want rid of everything to avoid having to have any kind of business dealings with the ex, he's proved to them all he can't be trusted to do the best for all, just himself.

Would have been a nice little earner for him, having a regular wage for doing nothing and when he needed a little extra just invoice the company for some phoney work!

Apparently the sister knows things haven't been done right but the ex has bullied her into transferring money to him, so guessing she is the one who had access to the business and FIL's bank accounts, which figures, FIL would never have trusted the ex with anything.

[BazzaS]

Apparently the sister knows things haven't been done right but the ex has bullied her into transferring money to him, so guessing she is the one who had access to the business and FIL's bank accounts, which figures, FIL would never have trusted the ex with anything.

 

Sister needs to go get legal advice!

As a director of the company she could be sued by the shareholders if she knew things "weren't being done right" but moved money anyway, if it wasn't in the company's best interests.

Similarly, as an executor of the will she can be sued by the beneficiaries if she hadn't acted in their interests / according to the will with the estate of the deceased.

 

Her duty as a director is to the shareholders / the company.

Her duty as an executor is to the estate and the beneficiaries.

She has no duty to the ex (except any that arises if he is a shareholder or beneficiary but only then according to his shareholding / share of the estate), not for the company or estate to be his personal piggy bank.

These are "fiduciary duties" : not just a moral or ethical duty, but enforceable by court action (court order injunction and / or damages) by those the duty is owed to.

[king12345]

The beneficiaries need to get a good accountant to look at the company accounts and assets when it comes to it.

Winding down a successful company may not be the best solution because the company may have no assets.

Imo best thing to do would be to sell the 52% shares to the other two shareholders or a third party if the beneficiaries don't want anything to do with your ex.

As it's clear that your ex hasn't got any more up to dated will, the executor needs to get his hands on the will, maybe visiting all solicitor firms in the area and register for probate.

Until this happens your ex will continue syphoning money out of the company and your fil bank accounts (if anything left, but I doubt it).

You need to move fast for the sake of your children.

[maddiemay]

My son has been sent a copy of the will by his aunt (joint executor) I'm astonished, but ex is named as an executor with his sister.

They get equal shares in the main residence, worth about £250,000 and I believe a property abroad, worth about £100,00 (that's in a seperate will) FIL told my son.

Everything else gets divided equally between, ex, sister and grandchildren

So ex gets equal shares in two properties, plus whatever amount 10 other properties are worth when sold divided by 8 (4 grandchildren, ex and sister)

What do you all make of that??

[BazzaS]

Son & daughter get equal shares of most of their father's estate, with some also shared between son / daughter and 4 grandchildren.

 

Since your mother-in-law pre-deceased her husband : the will isn't anything out of the ordinary

 

What was the testator's wishes regarding their 52% shareholding?

[maddiemay]

It doesn't mention the business, but I'm sure you've gathered the company assets are the properties, so without them there is no business. I think there's more than 10 properties but family members live in them.

The will is actually pretty basic.

The sister has been to get some legal advice today.

From what I've read Inheritance tax should be paid within 6 months of the death, or at least some held on account, I rather think the money that could have been used for that has gone in the ex's account

Sister says it'll be about £800,000 to be paid.

[BazzaS]

If the company has shares, the properties don't get shared out directly - it isn't "10 properties, 10 beneficiaries, you each get one property".

 

For a start, the FIL held 52% of the shares, so can only transfer his 52% of the shares to the beneficiaries.....

the ex and sister started with 24% of the shares each, and may end up with more if the will grants them more as beneficiaries.

[maddiemay]

All beneficiaries, except the ex want everything sold and money divided as per the will, they don't want to keep the business going to have an income from it, as he does, he'll just syphon it off over time. Grandchildren need to buy their own homes, all have jobs so don't want the income the business could generate, ex wants that so he doesn't have to work, he's got his home with the girlfriend, he'll have his chunk from the sale of FIL main residence, so he'd be happy to have his chunk in the bank and play 'boss' to them all.

But can they insist on everything being sold, that's not clear in the will.

[BazzaS]

Have I got this right?. Holding of shares before death was 52% FIL, 24% ex, 24% sister?

 

Everything else gets divided equally between, ex, sister and grandchildren

So ex gets equal shares in two properties, plus whatever amount 10 other properties are worth when sold divided by 8 (4 grandchildren, ex and sister)

 

Divided by 8, or divided by 6 (4 grandkids, ex and sister)?.

 

What does the will say about where the IHT (Inheritance Tax) gets paid from?. Is it paid from the whole assets before they are divided, or payable out of each individual's share?.

 

Let us say it comes out of the sale of the non-company properties, and the 52% of shares get split between the 6 beneficiaries.

That is 8 2/3 % each.

4 grandkids have 8 2/3 % of shares each (34 2/3 % total)

ex's sister has (24 + 8 2/3) -> 32 2/3 %

ex (similarly) has 32 2/3 %

 

 

All beneficiaries, except the ex want everything sold and money divided as per the will, they don't want to keep the business going to have an income from it, as he does, he'll just syphon it off over time.

........

But can they insist on everything being sold, that's not clear in the will.

 

Ex holds more than 25% now, so can block special resolutions by the shareholders.

Ex doesn't hold 50% or more, so can't block ordinary resolutions (such as one removing him as a director).

 

If Ex was faced with a choice : agree to wind up the company, distributing its assets to its shareholders, or

a) we'll remove you as a director, and get the new directors and accountants to look back at all the previous transactions

b) if any transactions are found where you breached your duties (so, didn't declare a conflict of interest and awarded yourself / your other firm contracts , or made a contract at an undervalue [where the firm paid more than it should for what it got in return, for him to cream off that difference)], or he took money from the firm that he wasn't entitled to, would he then agree??

 

Of course, you could go down the second route anyway, and probably get more back for the company, but it'll be messier!

 

If ex persuades his sister to vote with him, they hold 65 1/3%. The grandchildren ar 'minority shareholders', and can't force any action by a vote.

They'd then have to force a 'derivative action' for the director's wrongdoings, or petition the court for 'unfair prejudice' ; both of which are well into the realms of "need professional legal advice"!

[BazzaS]

But can they insist on everything being sold, that's not clear in the will.

 

A further (legal route) option is for those shareholders wishing to get out to apply to the court for the company to be wound up under s 122(1)(g) of the Insolvency Act 1986

http://www.legislation.gov.uk/ukpga/1986/45/section/122

They'd have to show it was "just and equitable", and the "unfair prejudice" route mentioned above is more commonly used.

[king12345]

Before we continue I think a question should be asked:

The will sent to your son is signed and witnessed, correct?

Otherwise is just good to start a fire when it gets cold.

[maddiemay]

Thank you Bazza and King, yes the will was signed and witnessed by a solicitor and receptionist. There is another will held in another country, ex and sister get equal shares of the property overseas as well as the main home, plus equal shares of whatever is left over (this is good news for divorce settlement)

This means they are getting the biggest share which goes completely against both parents wishes for over 20 years that I know of!

 

When this first came to light last week, there was mention of another more remote but equally as dodgy as ex family member being executor. There is no mention of him anywhere, so not sure why his/her name was ever brought into the issue, unless of course this isn't the last will!

I'm quite astonished that the will is so simple, there's no mention of the business or the remaining 52 ordinary shares, or does that form part of the estate, if so how are the valued?

[BazzaS]

I'm quite astonished that the will is so simple, there's no mention of the business or the remaining 52 ordinary shares, or does that form part of the estate, if so how are the valued?

 

The shares do form part of the estate.

They may not need to be valued, or may not need the properties to be valued, as the business assets may be exempt from IHT.

https://www.gov.uk/business-relief-inheritance-tax

 

If exempt from IHT : it may be "you get 1/6th of 52% each".

[maddiemay]

I'm pretty sure the wording in the will says without tax, so guessing it needs to be paid before division.

[honeybee13]

If there's any IHT to pay, probate won't normally be granted until outstanding IHT is paid.

 

HB

[maddiemay]

Thank you honeybee, I was under the impression probate is basically an application to authenticate the will and for permission to gather together everything the estate has. Until probate has been granted to the executors you have no right to do anything, certainly not take money from the deceased bank account.

 

From the information my son has managed to get from his father it seems he (his father, no other beneficiaries) want to use the wishes set out in the unsigned will, as that was the most recent, needless to say that one says keep the business as a going concern, not sell and divide up between all beneficiaries. The one to get the biggest gain is of course him, because he will get an income for doing nothing, and invoice the company for maintenance and repairs on the properties in the rental business when he fancies a holiday or new car! Additionally there will be no assets when it comes to financial settlement.

He is so transparent, remember I know this person inside out.

Relationships have broken down between him and his family, meaning he no longer has to answer any of their questions.

I'm truly disgusted, this is a new level of low even for him!