I would be grateful if someone could help:
Will clause on IPDI states
"Subject as above (life interest to spouse), the trustees shall hold the capital and income for such of my children, namely my stepsons A and B my daughter C and my son D as shall survive me and if more than one in equal shares absolutely PROVIDED that:
a) if any beneficiary of mine shall die in my lifetime leaving issue who shall survive me then such issue shall take the share of my estate which such beneficiary would otherwise have taken and
b) if there shall be more than one of such issue they shall take in equal shares per stirpes but so that no-one shall take a share if their parent is alive and takes a share.
Situation - testator has died, life tenant is alive and A recently died leaving 2 children.
On death of the life tenant, does the trust fund pass to:
1- A’s estate and PR distribute according to residuary gift in Will or intestacy?
2- A’s children (or grandchildren) living at the life tenant’s death
3- something else…
My understanding of the clause is that if A survives testator he has then a vested interest as he has fulfilled the condition and if A fails to survive the life tenant A’ share passes to his/her estate, however some expert advice will be appreciated.
“A”, a beneficiary, did not die in testator’s lifetime.
“(a)” referred to above is thus inapplicable.
Thus, on life tenant’s (ie spouse’s) death trust fund passes to A’s estate for distribution under A’s will (or on intestacy).
Thank you so much Malcolm, I really appreciate your help.
This raises another question and I would be grateful if you would kindly assist. A left a Will - would the beneficiaries of the trust fund be the beneficiaries alive at the time of death of the life tenant? or if a beneficiary/ies of A’s Will survived A but predeceased the life tenant the fund passes to the estate of the predeceased beneficiary? Sorry it sounds confusing!
I will take another look a bit later but if it helps my initial thoughts are as follows.
On the death of the life tenant (ie. spouse) the remainder interests of A,B C and D fall into possession. As A had died by this time, A’s remainder interest falls into A’s estate thus then passing under A’s will.
“A left a Will - would the beneficiaries of the trust fund be the beneficiaries alive at the time of death of the life tenant?”
Strictly speaking, at the date of death of the life tenant the remainder interests fall into possession which would mean B, C and D (all alive) inherit with A’s estate taking A’s share.
If the beneficiary under A’s will survives A then the beneficiary inherits A’s remainder interest under the trust at the date of A’s death. If that beneficiary then dies post A’s death, but pre-deceases the life tenant, the inherited remainder interest falls into the beneficiary’s estate and thus passes under the beneficiary’s will.
Thank you Malcolm for your kind reply, you are a star! Any further thoughts will be much appreciated as well as the underpinning law.
Fwiw I agree with Malcolm.
Since the remainder interests are not contingent on surviving the life tenant, they vest in interest on the testator’s death, falling into possession on the life tenant’s death. That vested interest passes under the deceased remainderman A’s will, which of course falls to be interpreted at the date of his death, such that, if any of A’s beneficiaries have died after him, their estates then take the interest they would have had.
Alexander Learmonth Qc
New Square Chambers
Thank you so much for your comments Alexander - that’s very kind of you.
Is this thread still open?
I have a similar situation. The testator left a life interest in his half share to his wife and then to his 2 sons as remaindermen. The property trust clause in the will reads
“…subject as above the property trustees shall hold the capital and income of the Trust Fund for my son A and my son B which shall be held be them or the survivor of them in equal shares and if either of them shall fail to obtain a vested interest leaving issue who are living at the end of the trust and reach the age of 18 years then such issue shall take by substitution such failed share …”
Son A died after the testator but before the life tenant.
Does this mean that A’s share is vested at the time of the death of the testator? Do we include this share in A’s estate on IHT205 when applying for the Grant?
By way of background, A died intestate and his estate passed to the life tenant by virtue of the intestacy provisions.
My understanding of “the survivor of them” in the context of the clause means the survivor of the life tenant rather than the testator. So if A predeceased the life tenant leaving no issue then B is the sole beneficiary.
I am not claiming to be an expert so perhaps some other professionals may shed light into your enquiry.
Tricky one - I think we would need to see the whole will to form a concluded view on the interpretation of this gift.
But if I remember rightly, a remainder interest (if A had one) is excluded property, so presumably would not be assessed to IHT on A’s death. (An IHT expert will doubtless correct me if I’m wrong about that!)
Alexander Learmonth QC