IPDI in a percentage share of property

Evening everyone

My clients are married and she has a child, 33 from a previous relationship.

For this reason the clients do not want standard mirror wills but want some asset protection so we are going for an IPDI on her death- husband to have life interest and child as remainderman.

Simple so far.

Clients do not want to tie up 50% in the Life interest trust though and were thinking more along the lines of a 30-70% split, child -husband.

Question - rather than her saying in her Will “I Give all of my beneficial share and interest in my property…” to the Trust can she say “I Give 60% of my beneficial share and interest” to the trust, with the remaining 40% of her half share passing to her husband absolutely?

60% of her 50% share is of course 30% of the total property value and this is the split they wish to achieve.

Would this be possible?

Thanking you in advance

Deborah Wise

I don’t see a problem in what you are suggesting.

Patrick Moroney

Presumably the only asset of any value is the matrimonial home which H and W hold as tenants in common in equal shares? Why not give the surviving spouse a life interest in the whole estate of the first to die with overriding powers ? That way there is some flexibility.

Vincent Oakley

thank you Vincent. I suggested this, in fact I always add overriding powers in my drafts - it’s then for the client to decide whether he wants to keep them in.

By overriding powers I presume you mean the power to gift or loan capital to the surviving spouse and even the remaindermen.

In this particular case the clients aren’t content with just this, they are keen for husband to own 70% of the property outright from the start if his wife dies first.

Deborah Wise

Hi Deborah.

Overriding Powers are usually a bit wider e.g. power of appointment; power to transfer trust property to another settlement and power of advancement. These can be exercised in favour of the life tenant and or other beneficiaries. The Overriding Powers could be exercised after the first death to achieve the solution desired at that stage. I would have independent trustees not family members as it looks a bit messy. Critical point is to ensure that H and W are tenants in common and not joint tenants otherwise the whole property will simply pass to the survivor on the first death by right of survivorship and will defeat the planning.

Vincent Oakley