Not sure whether to do this as a follow up question to JoanneR or a question in it’s own right.
Cients with a substantial estate (£4million) leaves residue into a Flexible Life Interest Trusts - life interest to spouse, with flexible powers of appointment / advancement. On surviving spouse’s death the trust becomes discretionary for his children from his first marriage.
It is likely that after the first death, the trustees will want to terminate the life interest and advance most of the estate to the children immediately, and probably directly to them rather than to remain in the FLIT. The surviving spouse is much younger and likely to survive 7 years.
Does this cause problems with CLT (Gill Steel mentioned this recenty), or is that only if the assets continue to be held on disretionary trust after the life interest has been terminated? If so, would it be better if the FLIT is drafted so that after the life interest ends the estate goes directly to the children?
Many thanks in advance
Steve Wilkes