Deed of Assignment by Remainderman of Life Interest Trust

Trusts Discussion
1

If a remainderman of a life interest trust wishes to give his entitlement under the Will Trust to his children, could they do this via a Deed of Assignment and if so, would there be an IHT/CGT consequence due to the assignment. Alternatively, could they rely on a DOV to do this and ensure the reading back for IHT/CGT was available?

2
  • could they do this via a Deed of Assignment - YES
  • if so, would there be an IHT/CGT consequence due to the assignment - There should not be any IHT assigning a reversionary interest as it is excluded property. No CGT if everything always onshore and no consideration.
  • Alternatively, could they rely on a DOV to do this and ensure the reading back for IHT/CGT was available? - Yes, if they meet the usual criteria for a DOV
3

Can anything be done where the Remainderman has died before the Life Tenant?

Wondering whether something could be done by the PRs/residuary beneficiaries of the deceased remainderman with a view to passing straight down to the residuary beneficiaries and avoiding having to reopen the estate when the life tenant eventually dies?

Would that avoid it falling into the estate of the remainderman?

4

I cannot see any reason why the PRs of the deceased remainderman cannot assign the intertest In remainder to the residuary beneficiaries of their estate, as they might any other asset within the remainderman’s estate.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

5

I am a Trainee and this is still a fairly new area of law to me. Are you able to point me in the direction of where the authority comes from to vary the interest of a remainderman?
The scenario I have is very similar to the original question; remainderman wishes to vary his interest to his children. Many thanks

6

I’m not aware of any specific authority. There may be one (and cleverer people than me may be able to help you) or, alternatively, lots of cases where it has happened and all parties and the Courts just impliedly accept that it is possible.

I would just start from the fact that a reversionary interest in a trust (of any kind) is a form of property which can be assigned under s.136 LPA. You can transfer property to other people in a number of ways including an assignment or (where applicable) a deed of variation, which could in many cases have an identical effect just using different words.