I’m looking at a will from an IHT perspective as to whether it validly creates an immediate post death interest in possession. The will originally created a discretionary trust for the children only with no IIP for the spouse such that the assets entering the trust would not qualify for the spousal exemption for IHT. We have persuaded the client to revert to the original solicitors with the intention being that there would be a life interest for the spouse and the assets would pass into a DT on the spouse death for the children.
As far as I can see all the will has been left as previously with the only amendment being one clause added which states “during her lifetime my Trustees shall hold the income of the Trust Fund upon trust for my spouse”.
The rest of the clauses all remain as when the DT was created including a clause which states that the Trustees “shall pay or apply the income of the trust fund…in their absolute discretion think fit”.
Is the wording creating the IIP sufficient when the rest of the wording all relates to the DT? I’m concerned that there is an argument that the Trustees still have discretion over the income and therefore there is not a valid immediate post death interest which would qualify for spousal exemption. I’m used to seeing further wording in respect of the income payable to the spouse during lifetime but that’s not to say it is absolutely required.