Readers’ forum: Loan agreement

My client is the residuary legatee of a large estate. She decided to execute a deed of variation to create a trust for the benefit of herself and her husband in relation to that entitlement. As a result the assets of the estate were passed into the hands of the trustees who promptly entered into a loan agreement with my client and her husband to lend them the entire value of the trust fund. Part of the assets that were lent to them were various shareholdings with a probate value of about £400 000.

Not long after the transfer of these shares one of the larger shareholdings had a rights issue that was not taken up but the cash payment was quite large and resulted in a fairly substantial gain. This was using the probate value in the ‘A over A plus B’ cost apportionment)....