Failed Life Interest


(john brewins) #1

Life tenant dies before the testator - so the life interest cannot take effect. But what happens to the ultimate beneficiaries of the life interest trust - the remaindermen. Does the entire trust fail because it never took root in the first place, and the fund falls back into residue , or do you simply move on to the remaindermen in the same way as if the life tenant had survived the testator but has now died?

john brewins
Howlett Clarke Solicitors LLP


(alexander.learmonth) #2

Simply move on to the remaindermen, unless there is something very weird about the way the will has been drafted.
Alexander Learmonth
New Square Chambers


(john brewins) #3

Yes, thankyou. I think it is one of those propositions that are so obvious in terms of common sense, but I was looking for the authority for it , and I did finally find it – The Doctrine of Acceleration ( Re Kebty-Fletcher’s Will Trusts, Public Trustee v Swan [1969] 1 Ch 339</uk/legal/search/enhRunRemoteLink.do?A=0.788511949329876&service=citation&langcountry=GB&backKey=20_T25532198653&linkInfo=F%23GB%23CH%23vol%251%25sel1%251969%25page%25339%25year%251969%25sel2%251%25&ersKey=23_T25532192770>, [1967] 3 All ER 1076</uk/legal/search/enhRunRemoteLink.do?A=0.027571862064977082&service=citation&langcountry=GB&backKey=20_T25532198653&linkInfo=F%23GB%23ALLER%23vol%253%25sel1%251967%25page%251076%25year%251967%25sel2%253%25&ersKey=23_T25532192770>.) which I had not heard of before.

john brewins
Howlett Clarke Solicitors LLP


(Lynsey Bashforth) #4

My understanding is that is moves on to the remaindermen unless the will specifically states that the trust comes in to being only if the proposed life tenant is alive at the death of the testator. I have a question though that has been on my mind.

Lynsey Bashforth
Bashforth Young Solicitor


(john brewins) #5

However, I am still concerned that the basic rule as it relates to lapsed gifts appears to be that the gift fails ab initio and falls into residue. This would mean that the provision simply does not have effect, and the gift over to the remainderman also then cannot take effect because the property has passed into residue. The Wills Act S25 appears to be authority for this. It seems to me that lapse is a different matter from , for example, disclaimer, which clearly does accelerate the gift over. Is “lapse” not different from “failure”? Williams on Wills appears to make a distinction.

John Brewins
Quality Solicitors Howlett Clarke


(Graeme Lindop) #6

Surely the gift has not lapsed merely because the life tenant has predeceased. The gift was to the Trustees to hold on trust for the life tenant AND the remaindermen. As the gift of the prior interest to the life tenant has failed, the remaindermen’s interest is accelerated to take effect on the death of the testator.

Graeme Lindop
Coles Miller Solicitors LLP


(john brewins) #7

I think that must be right , if the gift is to trustees upon trust . Would the position be any different if the Will simply said : “I give my property to my wife for her life and subject to that to my children”. Would the Executors of the Will , being the owners of the deceased’s property at death, be deemed the trustees?
John Brewins
Quality Solicitors Howlett Clarke


(Jill MacMahon) #8

I agree with Graeme; the only time it might lapse in the event of a proposed life tenant predeceasing is if the gift includes a condition e.g. ‘if the [beneficiary] survives me by 30 days I give my [house] to my trustees …’.

Jill MacMahon
Thackray Williams LLP


(Malcolm Finney) #9

Where the gift in remainder is vested the remainder is accelerated on the death of the life tenant but not if the gift in remainder is contingent (ie until the gift is no longer contingent).

Lapse occurs where the beneficiary dies before the testator; here, however, the gift is settled on trust.

Malcolm Finney


#10

I have a similar query but relating to a discretionary trust.

Where the Trustees are directed to hold a share of residue on discretionary trust ‘for the benefit’ of a ‘vulnerable beneficiary’ during her lifetime with the fund to then be appointed out on her death at trustee discretion among a class of family beneficiaries, what happens if the vulnerable beneficiary predeceases the testator? Does this share fall back into residue or does ‘acceleration’ apply so that the discretionary trust takes root with the trustees free e.g. to appoint the fund out to one or more of the Family Beneficiaries?

Andrew Suggitt
Bullimore Suggitt