HMRC’s view in the example that Neil Jones mentions (example no.1 in TSEM1563) seems rather surprising on a first reading. The scenario in that example is as follows:
“Mrs A left the residue of her estate to such of her grandchildren as were alive at the date of her death. She directed that the funds should not be paid to the grandchildren until they respectively attain age 21 years.”
HMRC’s analysis is:-
“All of the grandchildren who were alive when Mrs A died are entitled to an equal share in the residue of the estate. There are no other conditions that they must fulfil before they become entitled. The direction about payment does not affect this basic position. The beneficiaries have a vested interest and the trust is a bare trust. The income ought to be returned as the children’s own income and not that of the trustees.”
This seems to me to be a situation where the testator directs the trustees not to hand over the trust fund to the relevant beneficiary until the beneficiary is 21, even though the trust is in actual fact a bare trust and (ie the beneficiary has a vested interest in the capital and income from the date of death) and even if the beneficiary has turned 18 and could give a good receipt. It is just that the trustees are directed not to hand over the trust fund voluntarily.
This is subtly different from a trust where the beneficiary only gets a vested interest at 21 and this will turn on the precise wording of the Will. I cannot say that I have seen a Will which is drafted in the manner described in HMRC’s example, but it is a reminder to me always to check the actual drafting carefully, rather than to assume that the reference to a specified age makes it a substantive trust.
New Quadrant Partners Ltd