Partition of trust where life tenant and remainderman are the same


#1

I have a will clause which reads as follows:

(a) A one tenth share of the Residuary Estate upon trust to pay the income to A absolutely
(b) Upon the death of the survivor of B (the wife of the deceased) and C then as to the capital and income of the entire Residuary Estate for A absolutely if he shall then be living
© Provided that if A shall die without having attained a vested interest hereunder but leaving issue who survive him and attain the age of twenty one years then such issue shall take my Residuary Estate by substitution etc……….

C died a number of years ago and A has no issue.

A has a life interest and is also the remainderman contingent on surviving B. Can we bring this trust to an end now during the lifetime of A and B given that, if A died before B, the capital interest would pass to her by way of a partial intestacy?

Laura Green
Boyes Turner LLP


(Paul Saunders) #2

If the testator (T) has already died then, if a partial intestacy arises as the result of the death of A before B, I understand the intestacy rules that apply will be those as at the date of death of T. However, current values will be applied when ascertaining the respective entitlement of the individual beneficiaries.

If, say, when T died (without issue?), the statutory legacy was £250,000 and A was his widow, it would be necessary to ascertain the current value of the statutory legacy (including interest) and the actuarial value of her life interest (as at the date of death of T). If the current value of trust fund exceeds the widow’s net capital entitlement, T’s wider class of relatives would share in the distribution.

Before consideration can be given to a termination of the trust, it will be necessary to identify the potential range of eventual beneficiaries and include them in the discussion.

Paul Saunders


(mullenky) #3

Have you also considered the possibility [however remote] of A acquiring
issue - perhaps by adoption if not naturally?

Kevin Mullen