Death of remainderman before life tenant deceased

Trusts Discussion
1

A died leaving his wife B a right of occupation relating to his share of the property subject to certain trigger events. Following her occupation ceasing, or the property being sold or her death, his share of house/proceeds passed to his residuary estate, which was left to such of his children C and D as are alive at his death. No substitute provisions

No trigger events occurred and wife continued to live in property until her recent death in June this year.

Daughter survived A but died before B. Her estate is intestate. B was divorced and has one son.

Questions:-

  1. Did C acquire a vested interest in A’s residuary estate by virtue of fact she survived him?
  2. Does the value of the 50% interest in A’s share of the property have to be included in C’s estate account.
  3. The family accountant dealing with C’s estate is of the view an IHT 400 is required because of the interest in A’s residuary estate. Do forum members agree?
  4. The accountant is also planning to include the value of an insurance policy held by C in her IHT account. Is that correct?
  5. Can this estate be covered by the new online reporting rules - or does that depend on the valus of the trust / policy.

we do not yet know if IHT is payable - we believe it depends on whether the policy was written in trust - to which we are still awaiting answers.

Michael McCabe
Galloways Accounting Private Client Limited.

2

  1. Yes – she had an absolute interest vested in remainder

  2. No – her interest was a reversionary interest and, therefore, excluded property

  3. I don’t think excluded property needs to be reported but happy to be corrected

4 & 5. Surely this depends on the nature of the policy and to whom it’s payable on her death

Graeme Lindop
Probate Consultant
Coles Miller Solicitors LLP

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3

As Graeme notes, C’s interest is an interest in remainder and as such qualifies as excluded property [IHTA 1984 s48] which, under IHTA 1984 s3(2), does not form part of a deceased’s estate.

Malcolm Finney