I have been asked to help some clients with a life interest trust they set up in 2014 with the help of a firm of will writers. They settled their home on themselves, with the remainder interest going to their children, the usual sort of asset protection trust. They now wish to move and would prefer to get rid of the trust completely if they can. Both settlors are alive and well, no capacity issues. Property value is £425k.
I’m not sure they can get rid of the trust easily; they are life tenants but not beneficiaries, so surrendering their life interest won’t help them get the beneficial ownership back.
What does the trust deed say? If there is power to revoke/advance or appoint to themselves, they can use that. If not, they may be able to agree with their children to terminate the trust (depending on the age of their children and any other beneficiaries).
Hi Andrew
Thank you for your reply. There is an overriding power in the trust deed to appoint to any beneficiaries or transfer to new trusts to benefit the specified beneficiaries, but the settlors are life tenants and aren’t included in the class of beneficiaries.
The beneficiaries are defined as their four children plus their issue.
There is no specific power to revoke/advance/appoint to themselves, only to the beneficiaries.
Are the children’s interests in remainder contingent on them surviving the parents or are they vested? If vested, they could assign their remainder interests to the parents so that the life interests and the remainder interests merge.
