Life interest trust and sale of property

Trusts Discussion
1

Hi all

Would very much appreciate your thoughts on whether or not the following scenario and Will provisions provide W with a right to income on the proceeds of sale of the Property

H and W owned XXX Cottage as T in C .

H died in 2022

W subsequently sold XXX Cottage and invested the proceeds and W has been receiving the investment income

Will provisions

I give free of tax my interest in XXX Cottage or any other property bought in substitution thereof (‘the Property’) on trust to W for life and after her death to my son.

If at the date of my death I have contracted to sell the Property this gift shall take effect as a gift of my share of the net proceeds of sale.

If I have sold the Property during my lifetime my Trustees shall hold a sum equal to my share of the net proceeds of sale of it on trust for W for life and after her death to my son

Thank you in anticipation

2

Yes, the clause carries any income arising in the trust fund.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Yes, (for H’s share as LT plus her own share absolutely).

In what capacity did W sell H’s share?

If CGT was due then (probably) both W and the trust/estate should have made CGT returns.

If no CGT is due because of PRR then the trust needs to claim the relief.

1 Like
4

Thank you Paul – that is very helpful

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