Rectification of mistakes

In Allnutt v Wilding [2007] all ER (D) 41 (Apr), an individual settled funds on trust in the belief that the terms of the trust meant the disposition was a potentially exempt transfer for IHT. In the event, the trust was discretionary, and the disposition a chargeable one.

The trustees sought a court order rectifying the terms of the settlement on the ground that the settlor had erred in thinking that he was effecting a PET.

The court held that the error was not a mistake permitting rectification since it was not a mistake made in the recording of the settlor's intention to create the trust but, rather, a mistake over the fiscal effect of the trust.