I would be grateful for your thoughts … we are dealing with an estate where the testator gives his share in his main residence to his Trustees to hold on trust for his wife for life, with remainder to his children. Wife does not want the life interest and intends to disclaim. The Will specifies that in the event of the life tenant disclaiming it wold be treated as if she had died on the date of the disclaimer.
All parties are (informally) in agreement that, rather than a share in the property passing to the remaindermen, a lump sum equivalent to the net sale proceeds of the share will be paid instead. I feel that, to protect all parties, a Deed would be appropriate setting out that the remaindermen agree to accept the amount in lieu of the share in the property but am going round in circles trying to work out how best to approach this! I therefore wondered how other practitioners would deal with this?
Sounds to me that a deed of variation would be a more appropriate way forward
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
If the wife disclaims the general law regards her as never having become entitled to the life interest. And the remainder would be accelerated on the basis that she did not survive. The alternative analysis of a partial intestacy during her lifetime seems potty to me, on stilts.
Is that affected by the Will deeming the same consequence to follow as if she had died on the date of the disclaimer? The Will cannot countermand the facts but it could enjoin a gift over to operate in favour of those entitled on that fictional basis which would be to accelerate the remainder, so here no difference in the outcome.
The remaindermen would have to be all ascertained and sui iuris to vary the will’s provisions but if the remainder subsists in the residence alone what would be the point? They are entitled to the residence in specie or its sale proceeds. The idea seems misconceived. Perhaps the plan is that they obtain a sum equal to the current sale value instead of the residence which falls into residue, which presumably must pay the agreed sum; so the residuary beneficiaries or all of them must agree to it if and to the extent they are different persons to the remaindermen and are adults and all ascertained. If not the PRs may have authority to pay the sum rather than seel the asset, because it is better for residue to retain an appreciating asset (and let it?) or sell it later in a more favourable market.
The disclaimer will operate for IHT as if the wife never owned the QIIP: s93 IHTA. It will therefore pass through the husband’s estate only and not hers nor will there be a QIIP termination charge under s 52(2A).
Jack Harper
Thank you both for your comments. I think the most appropriate way forward may be for the wife to disclaim her life interest, thereby accelerating the remainder. The remaindermen can then be ascertained and can conclude a DoV varying their entitlement to a fixed sum rather than a share in the property.