Settlor interested and widow

If a discretionary trust excludes the settlor but includes the settlor’s spouse it will be settlor interested under section 625 ITTOIA 2005. However, once the settlor dies the wife becomes the widow. Section 625 specifically excludes “the widow or widower or surviving civil partner of the settlor” from the definition of spouse.

Therefore, does a trust which is settlor interested during the settlor’s life because his wife is included in the definition of discretionary beneficiaries cease to be settlor interested on his death because that wife is now his widow?

Nicholas Bennett
Standley & Co

Yes it does cease to be settlor interested because the settlor is dead. His surviving spouse was not the settlor.

Maxine Higgins
Citroen Wells

ITTOIA 2005 s624 applies only where income arises under a settlement “during the life of the settlor”. Thus, on death of the settlor the settlement is, from the date of the settlor’s death, no longer “settlor interested”.

The exclusion of a widow/widower from the definition of “spouse” is to explicitly recognise that the marriage terminates on death ie widow/widower no longer qualifies as a “spouse”.

Malcolm Finney