life interest trust

We act for a client who has a life interest trust over his main residence.

The Trust states the property will be left equally between his 3 children, on his death.

The question we have is that our clients son has passed away leaving children behind. Are the grandchildren entitled to their deceased fathers 1/3rd?

This is the clause regarding the Trust specified in the settlement agreement, ‘subject to that, the Trust Fund shall be held on trust for xxxxx, xxxxx and xxxxx absolutely.

shazad butt
rudlings wakelam

You will probably need to look at more of the Will than just this phrase to determine the position. Assuming the son died after the testator, the two usual options are:-

  1. The remainder beneficiaries had a vested interest in remainder from the date of death of the testator.
    This would mean that the deceased son’s remainder interest would have passed to his estate on his death. On a simple interpretation of what you have quoted, this could well be the position here.

  2. The remainder beneficiaries have only a contingent interest in remainder while the life tenant is alive and that each one’s interest is contingent on that one outliving the life tenant.
    In this case, unless there are substitution provisions, the deceased child’s estate does not inherit.

The latter can fixed by the other two remainder beneficiaries now assigning part of their respective remainder interests (which are excluded property for IHT, but also themselves only contingent interests) to the estate of the one who has died, if they are willing to do so.

If the son died before the testator, then s33 Wills Act 1837 may save it too, again assuming no contrary intention in the Will. If s33 does not apply, then the same fix is possible (ie assignment of part of remainder interests, if the other children of the testator are willing).

Paul Davidoff
Moon Beever

The beneficiaries of the son’s Will will be entitled in the absence of a substitution clause in the trust

Simon Northcott