Contingent Interest Trust Issues

Trusts Discussion
1

I have a Will which states a 50% share of residue:

‘to my grandchildren … subject to each attaining 25 years of age and until such attainment the income thereof shall be accumulated or applied wholly or in part by my Trustees in their absolute discretion…’

Standard and Special Provisions (2nd Edition) apply with no variations.

From my understanding this is a contingent interest trust and I am considering the provisions under s.32 TA 1925.

There are four grandchildren, one of which is 5. The fund is small and the family are looking to appoint out all shares now. They are concerned costs and fees in maintaining the trust over the next 20 years would extinguish any capital for the youngest grandchild.

My questions are:

  1. Is this possible and by what means?

  2. The parents and trustees for the youngest grandchild are particularly concerned about long term costs diminishing capital and so far all trustees are in agreement. However, if there is any disagreement here, is it possible to divide the presumed shares now so each side of the family can mange their own children’s interests under the terms of the trust separately? One parent would be a professional trustee over their child’s share but would not wish to act in this capacity for all the family for the next 20 years. (I expect the answer to this is no!)

2
  1. Yes - advance their shares under s.32. Sums for minors can be paid to their parents (I assume payments to parents are covered by the STEP provisions).
  2. Yes, make advances to the parents of each child or keep the trust but appoint different trustees of each share.

Andrew Goodman
Osborne Clarke LLP

3

Thank you Andrew, that’s really helpful.