Contingent remainder interest in a trust

Trusts Discussion
1

I have a life interest trust, which provides for the spouse for life, thereafter for children at the Vesting Date, which is the date of death of the surviving spouse. There is provision for substitution of grandchildren (alive at Vesting Date) should any of the children die before the Vesting Date.

One of the children, owes money to the trust as the result of a debt owed to the deceased pre death. The child wants to offset his interest in the remainder and pay the balance in cash.

As the remainder interest is contingent and the class of grandchildren is still open, I don’t think this is possible, so their only option is to wait until Vesting Date and deal with it then.

Do you agree? Is there any other way around it?

I can post an extract of Will if needed.

Thank you

Nicola Willis
R George Davies & Co Solicitors

2

Are there no powers of appointment which could be exercised to forgive the debt? Are the powers of investment wide enough for the trustees to leave the debt outstanding, on terms as to payments of interest, and sufficient security?
Just some thoughts.
Alexander Learmonth QC

3

Thank you very much for your reply.

No powers of appointment in Will.

There are extended powers of investment, so currently debt is outstanding (its an investment in a property rental business) and paying the life tenant an income.

I have suggested the Trustees try to obtain better security for the debt to protect the trust.

As far as off setting the debt against the beneficiary’s future potential entitlement, I don’t think he can until it vests.

Of course the other beneficiaries want it all resolved now as its causing issues in the family.