I act for a life interest trust (IPDI). The trust held the main residence of the deceased and his wife. The wife had a life interest in the trust and the relevant clause specifies that
“until sale of the said premises my trustees shall permit my said wife to occupy the said premise without payment of rent or use and occupation charge she keeping the same insured in the name of my trustees. Subject to the foregoing trusts and provisions the said premises the net rents and profits thereof before sale the net proceeds of sale thereof and the income of such proceeds shall be held by my trustees and divided in the following manner - 50% to his wife, 50% to his children in equal shares. "
The wife moved out of the property in May 2014 into residential accommodation, simply because the property was too large for her to manage. Because of the nature of the property it was not sold until earlier this year. In the meantime the trustees have maintained the upkeep of the property and have prepared the property for sale.
My question is over the date that the wife has given up her life interest - is it the date that she moved out of the property or the date that the property was sold and 50% of the proceeds were paid to the children.
The life interest was in half only, as the wife owned the other half absolutely. I believe the life interest in half was terminated when she ceased to occupy.
I am confused by Leanne’s reference to a life interest, when the wording
quoted suggests that any trust ends on sale - without any reference to a
date of death. Am also puzzled by Simon’s comment, as the facts mentioned
do not seem to equate to a former tenancy in common.
The reason the trust is only over half is that the wife was left half absolutely, subject only to her right to occupy. Those interests merge giving her an absolute interest in half.
Just to clarify, the property in question was held by the deceased in his sole name at the date of his death, it was NOT held jointly by the deceased and his wife.
Thanks Leanne. I think it is clear from the wording supplied that the trust
ends on the sale of the property [which presumably is the date of exchange
of contracts].
The next question is when the widow’s interests end; which may need
consideration of ALL the will and, possibly, the will-maker’s file. On the
wording seen, the trustees “shall” [ie must] “permit” [?allow] the widow to
occupy - which would seem to be an IPDI until the widow moves out, but
thereafter it is not clear.
Surely, it can be argued that on the widow vacating the premises [and
presumably giving notice to the trustees that occupation is no longer
desired] that her IPDI has ended. But how do the trustees allocate the
costs of other matters - insurance, maintenance etc? What would happen
under the terms of the will if the widow had died before the property had
been sold?
I suspect that this is a case that should be referred to counsel for
specific advice, providing the amounts involved justify this.