Power to transfer trust assets to a separate settlement

Trusts Discussion
1

A will contains the following power:

“I DIRECT that my Trustees shall hold my Residuary Estate and the income thereof upon trust for all or such one or more of…[beneficiaries]…as my Trustees shall decide and in such shares and upon such trusts for their benefit as my Trustees may by deed or deeds irrevocably appoint within two years (or other period then prescribed) after my death…”

Is this enough to allow the trustees to transfer part of the trust fund to a new, separate settlement for the benefit of a number of the potential beneficiaries?

Many thanks in advance,

Jennifer Russell
Wright Hassall

2

My understanding is that a transfer to an existing settlement requires a specific power. However the overriding power you describe could be exercised in a manner that is ‘exhaustive’ of the existing trusts and if it is exercised in that way then the assets will be treated as having become comprised in a new and separate settlement. See SP 7/84. It is sensible to include a statement in the relevant deed about what is intended. For inheritance tax purposes the assets will remain treated as comprised in a single settlement.

Paul Davies
Clarke Willmott