X died leaving Will with residue to be split between adult children. One child entered into a DOV to redirect £100,000 of her share of the residue to her own minor children upon them each attaining 25 (i.e. £50,000 for each minor child). The legacies in the DOV did not carry income or capital growth and so an IPDI has inadvertently been created in favour of adult beneficiary.
The effect is:
(a) the child receives £50,000 at 25;
(b) income due to residuary beneficiary (creating IPDI therefore a life tenant);
© capital growth due to adult beneficiary when child turns 25;
(d) adult beneficiaries deemed to be making at PET of £50,000 on each 25th birthday; and
(e) the trust will be making a disposal for CGT.
The children are minors and cannot rely on SvV to end the Trust.
- Is the IPDI only in favour of the one adult residuary beneficiary who entered into the DOV, or to all of the residuary beneficiaries?
- What is the correct route for the life tenant(s) giving consent to the trustees to end the trust now in favour of the minor children?
- Is there another option to change the position so that all capital/income goes to the minor children without ending the trust in such a way that would result in PET and CGT implications for the life tenants (i.e. to correct the DOV to carry out what was intended)?
Any thoughts are welcomed.