I’m struggling with an unusual set of circumstances which would benefit from a TDF airing!
Settlor ‘A’ in 1970s created an interest in possession trust for himself as life tenant with the provisions that on his death the Trust Fund should be held for “my brother ‘B’ and my sister ‘C’ as shall attain the age of Thirty Years if more than one in equal shares absolutely but if either the said brother or sister shall die under the age of Thirty years leaving a child or children such children shall take in substitution.”
A has died (2025) but B predeceased him in 2021 (well over the age of 30). C is living.
Issue 1 (easier): I’m fairly sure about this one, but my interpretation is that on B reaching the age of 30 (many years ago), he was confirmed as a remainderman, and so on A’s death B’s remainder interest passes to B’s estate (in effect his widow ‘D’) rather than his children. Any disagreements on this conclusion?
Issue 2 (trickier): Both C (the sister) and D (B’s widow) are mindful of their own IHT position going forward, and would like to redirect the remainder interests they are due to receive from the Trust Fund to their own respective children (but do so with reading back IHT effects so not treated as PETs). This is where I seem to be reading conflicting guidance.
Although we are within two years of A’s death, IHTA84/S142(5) and IHTM35072 suggest that a Deed of Variation would not be possible. HMRC suggests that if A had had a general power of appointment under the Trust then a variation might be possible but this is not the case here. Any disagreements on this sub-point?
However, is it possible for C and D to disclaim their remainder interests under s.93 with the desired reading back effects? Neither have received or accepted the assets or any benefit yet. In these particular circumstances if C and D disclaimed the Trust Fund would likely revert to A’s estate which, in turn, would end up with the desired next generation children of C and D.
Grateful as always to any insights you might have.