We’ve been asked to advise on the ending of LIT following death of the life tenant. The Will of the first spouse left LIT of house to surviving spouse, at the end of trust the property passes to residue, however residue passes to surviving spouse or onto children if surviving spouse had predeceased - the question now arises as to who is the remainderman of the LIT now surviving spouse has died?
Is it the surviving spouse’s estate as he was the residuary beneficiary? Or is it the children?
The accountant seems to think there is a bare trust for the children but the wording of the Will would suggest otherwise - that the trust fund has now passed to the Life Tenant’s estate.
This scenario has arisen a number of times on the forum.
If remainder passes to residue and the wife was the sole residuary beneficiary, then she takes absolutely and there is no life interest.
What were the will drafter’s instruction? It may be that they either misunderstood their instructions, or failed to understand the effect of the will they had prepared. Is it too late to seek rectification of the husband’s will?
Are the beneficiaries of the wife’s will and those who would have benefitted under the husband’s will had he survived the wife the same? If so, then there may be no practical difference in either their entitlement of the IHT position.
If they are not the same, then you should obtain the will drafter’s file and consider if they correctly incorporated the husband’s instructions into his will.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals