Crowe V Appleby on a Statutory trust

I have a statutory trust which was created on the death of my client’s husband in 1981. A life interest on 50% of the balance of the estate (after the chattels and statutory legacy were appointed to the wife) was created for the wife and the remaining 50% to be held on statutory trust for the children (one of whom was not born at the time of death) on attaining the age of majority (18 due to being a statutory trust)

The beneficiaries attained 18 in 1997 and 1999.

It is my understanding that absolute entitlement of the beneficiaries 50% share of the trust (25% to each beneficiary) would not be achieved until the final contingency is met (in this instance I believe this to be when the youngest attains 18). Does the interest in possession on the other 50% of the fund have an impact here? Is the death of the life tenant in fact the final contingency which is where Crowe V Appleby comes into play or are the two separate? Is it that because they do not have an absolute interest in the whole of the property when they attain the age contingency due to the life interest that Crowe V Appleby would apply?

The assets held on trust are residential property, land and an investment portfolio. The question here is whether Crowe V Appleby applies to the whole of the trust regarding the residential properties and land? Due to the increase in value there would be a substantial IHT liability on the value of the 50% IIP element which would be included in the life tenant’s on their death or a substantial CGT liability if the life interest were to be surrendered and assets appointed to the remainder men. Neither of which are very attractive!

I believe the children’s share will be subject to cgt on W’s death but her share gets a cgt free uplift.

S32 could be used to advance part of W’s share with no cgt as part is still in trust with an iht saving if she survives 7 years. S32 could also be used to provide a life interest for the children in whatever is still in trust for W on her death to postpone cgt. This will be a relevant property trust.

Can assets be appropriated between the shares to help cgt and iht issues?

Simon Northcott

Presumably PPRR may help with some of the children’s gain.

Simon Northcott