Administering an estate can be a difficult and daunting experience. Legal jargon such as ‘Overreaching’ and ‘trusts of land’ can add to that complexity and make estate administration feel like a maze with no way out.

In this article, we explore the concept of overreaching and how it can affect estate administration, while providing a clear understanding of what overreaching is and how it can work to protect beneficiaries.

What is a Trust of Land?

A trust of land is a legal arrangement where property is held by one party (the trustee) for the benefit of another party (the beneficiary). This beneficiary might not have their name on the property deed, but they still have a beneficial interest in the property. Trusts of land are commonly used in situations where the legal owner of a property is different from the person who benefits from it, such as when a parent holds a property on behalf of their children. Another example would be where a surviving spouse is given an interest in a property following their partner’s death.

What is Overreaching?

Overreaching is a legal process that occurs when a property held under a trust of land is sold or transferred. It’s a protective mechanism designed to ensure that the interests of beneficiaries are safeguarded, especially in cases involving land. In simple terms, overreaching involves the conversion of the beneficial interests of the beneficiaries into a monetary sum. This sum is then paid to the beneficiaries when the property is sold or transferred.

How Does Overreaching Protect Beneficiaries?

A beneficiary of a trust of land can have a stake in a property even if their name isn’t on the title. If the legal owner of the property, usually the trustee, decides to sell the property, the beneficiaries’ interests could be at risk. Without overreaching, the trustee might be able to disregard their beneficial interest, leaving them with nothing.

Overreaching steps in when a sale or transfer of the property takes place and the law requires that the proceeds from the sale be applied in a way that safeguards the interests of beneficiaries. This process overrides any claims or interests that might otherwise have been attached to the property. The monetary sum generated from the sale is distributed among the beneficiaries in accordance with their beneficial interests. To ensure beneficiaries are protected, investigations should be undertaken to establish a true beneficial interest. An example would be a title making reference to a Declaration of Trust.

What is a Declaration of Trust?

A Declaration of Trust is a legal document that outlines the terms and conditions of a trust arrangement. Trusts are legal entities that hold and manage assets for the benefit of specific individuals or entities, known as beneficiaries. The person or entity that creates the trust is called the grantor or settlor, and the person or entity responsible for managing the trust assets is the trustee.

Overreaching in Probate

Overreaching also plays a significant role in probate. If a property owner who held property in trust passes away, their property may be subject to probate. During this process, the principle of overreaching can ensure that the interests of beneficiaries are still protected. When the property is sold as part of the probate process, the proceeds can be overreached to ensure that the beneficiaries receive their due share.

The concept of overreaching may initially seem complex, but it serves as a crucial safeguard for beneficiaries in various legal scenarios, including estate administration and probate. So, while the legal intricacies of estate administration may make it feel like a maze, understanding the role of overreaching can provide clarity and assurance, ensuring that beneficiaries receive their rightful shares.

Who are Shakespeare Martineau?

We are a multi-award-winning business that provides legal advice for life and business, the firm’s purpose is clear: to unlock potential.

Working with organisations of all sizes, the firm delivers a broad range of specialist legal services and has expertise across multiple areas including but not limited to energy, education, banking and finance, healthcare, investment funds, manufacturing, agriculture, family business, Islamic finance, later living, social housing, charities, and real estate. Shakespeare Martineau also provides services for families and private clients.

Part of the legal and professional services group Ampa, Shakespeare Martineau is a certified B Corporation, meaning it has been verified by B Lab to meet high standards of social and environmental performance, transparency, and accountability.

The firm has been listed in Best Companies 2022 as one of the top 100 best large companies to work for in the UK. It also ranked as a top 25 law firm, top 75 East Midlands company, top 75 West Midlands company, and top 50 large London company to work for.

With more than 1,200 people, Shakespeare Martineau has hubs in London, Milton Keynes, Birmingham, Solihull, Stratford-upon-Avon, Bristol, Nottingham, Leicester, Lincoln, Sheffield, and Edinburgh.

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Suzanne acts for high net worth individuals in all aspects of private client work. She has a particular interest in advising family business owners and has the STEP Advanced Certificate in family business advising.

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Published: 18th September 2023
Area: Private Client

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