My firm are the Trustees of a will trust established in 1950 to pay the income to a life tenant for her life time. The life tenant sold her life interest for consideration in the 1960’s to a reversionary interest company who have received the income ever since. Life tenant passed away earlier this month with the trust now distributable to her children. I don’t believe the trust forms part of her estate and would instead be taxed as relevant property but I would be grateful for a little clarity on this.
No, I don’t see how it would form part of her estate. It would only become relevant property if the children were not absolutely entitled on her death.
The initial life tenant’s interest in possession terminated on sale with the reversionary interest company acquiring an interest pur autre vie. As a consequence, on the death of the initial life tenant the company’s interest is terminated.
The trust property will not form part of the estate of the initial life tenant.