It is not uncommon for a trust to list as beneficiaries the issue of the settlor and their spouses. It has been suggested to me that on a husband’s death his wife ceases to be his spouse and accordingly ceases to be a beneficiary of the trust. I find this startling. It would mean that if the two jointly occupy a trust property the trustees would be under a duty to evict the widow immediately on the husband’s death. The Rent Act 1977 refers to a “surviving spouse”, which suggests that the concept can survive death. Can anyone provise a definitve answer?
I suggest the meaning of “spouse” in any particular document is subject to context, much as is the case with “issue”.
However, in general, I believe that “spouse” has a wide meaning, and will include a widow or widower. For example, s.18 IHTA 1984 refers to “spouse”, not “surviving spouse”.
I suggest that “surviving spouse” is used in similar fashion to “eldest child” in that the adjective is merely descriptive rather than a limitation.
Often, where a trust provides for occupation of a property by 2 people, the entitlement is given to A and B “and the survivor” thereof. In the absence of reference to the survivor, I suspect either the drafter failed to put their mind to the situation upon the death of the first to die, or there is an intention that the survivor has no entitlement to occupy following the death of the first to die. Whilst the later situation is unusual, it does happen (although more frequently by reference to the death of a named beneficiary, whether it be A or B).
As stated above, I believe the meaning of “spouse” is controlled by context, and the answer in any specific case will be fact specific.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Interesting.
Ive always understood Spouse to mean: legally married to the other person. Which does cease on death.
Richard Bishop
PFEP
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Following death, the “surviving spouse” no longer qualifies as a “spouse”.
The surviving spouse is also commonly referred to as the “widow”.
Typically, in a trust deed the term “beneficiaries” includes descendants of the settlor plus their spouses together with the surviving spouse of the settlor (ie the widow) as this is generally effective for tax purposes; the settlor’s spouse not being included.
If the child of the settlor is married and life interests area appointed to the child and his spouse who are at that time beneficiaries and the child subsequently dies (in which case the child’s surviving spouse at that time no longer qualifies as a beneficiary of the trust because the surviving spouse is no longer a spouse) I do not believe that this causes the life interest to terminate.
Malcolm Finney
For decades the best precedents have included, in a detailed definition of qualifying “Beneficiaries”, the term “surviving spouse”, precisely to obviate this problem. Otherwise the term “spouse” takes its general law meaning i.e. a person who is lawfully married to the other party while both are alive, even if separated. This does not include a surviving or former spouse or a cohabitant, even if there are living children of the union who are themselves beneficiaries.
The approach to the interpretation of documents and statutes is similar up to a point, e.g. as regards “ordinary words”, but statutes often employ a specialised definition and must be construed purposively to discern (often oracle-like) the intention of Parliament. The intention of the settlor is scarcely ever relevant, unless rectification in accord with their plainly disregarded instructions is in point.
Some statutes use the general law term e.g. s 18 IHTA 1984 and s.714(2) ITA 2007 (but compare s.733A and also s625 (4) ITTOIA 2005). Others ordain prescribed consequences for existing or future documents but can leave that open to doubt e.g. the 2013 Act making same-sex marriages lawful.
Settlors are often reluctant to include contingent recipients in the explicit class of a (non-secret) trust e.g. former spouse, civil partner, co-habitant, lover, illegitimate issue, despite their being persons who only can, and not must, benefit. This has given rise to including a power of the trustees to add a person as a beneficiary at their discretion, usually constrained by a third party consent mechanism to minimise abuse, often supplemented by a non-binding letter of wishes.
I agree with Malcolm that there is no general rule of supervening disqualification. If trustees exercise a power to benefit a person who is the current spouse of a beneficiary, alone or jointly, a court is unlikely to regard it as equitable to deprive them of a continuing benefit after the qualifying spouse’s death, unless it was originally so limited or was revocable in that event or more generally.
But after that event no benefit can be conferred without breach of trust or fraud on a power. Granting a benefit to a qualifying beneficiary who is a child of the surviving spouse which incidentally benefited the parent, e.g. some kind of occupation right without restrictions on sharing, might not be such a fraud. Non-professional trustees robustly in tune with practical family politics may adopt the Nelson touch (I could not possibly comment).
Trustees should not “evict” anyone from residential property they own, not a licensee holding over nor even a trespasser, without specialist advice for all involved (Kerching!), or in addition to any civil liability they may “not have to say anything but if they fail to mention…”
Jack Harper
James Kessler, in Drafting Trusts and Will Trusts, cites the House of Lords in Vestey v. IRC 31 TC 1, holding that ‘spouse’ does not include ‘widow’ or ‘widower’.
Michael Cutler
Colemans Solicitors LLP
It may not matter (and I tentatively agree with that) but the actual word under interpretation in the case was “wife”: s38 (2) (b) FA 1938.
In those heady days the cardinal or golden rule applied and the intention of Parliament was to be ascertained from the plain words. Not, even nowadays, its actual intention of course but rather what Laws J described in Thoburn v Sunderland Council as its “imputed, constructive, or presumed” intention; actual intention, he said, is relevant only if the statute is “constitutional” or of “constitutional character”: cited with approval by Colton J in the NI Protocol JR case [2021] NIQB 64 at [91]. Evidence of such actual intention can then apparently be derived from an affidavit of a civil servant who was personally involved in the travaux preparatoires.
We can now have this non-actual intention divined by contextual or purposive construction or “naked usurpation of the legislative function”. And so, apart from Pepper v Hart situations, the determination of actual Parliamentary intention as to most, including fiscal, statutes remains judicially taboo.
Jack Harper