I would be grateful for your thoughts on whether the following Will wording creates a vested or contingent interest for daughter K:
“My Executors shall hold the residue as to one half in trust for my daughter K until she attains the age of 21 years and as to one half absolutely for my daughter D”.
There is no gift over in the event that the gift to either daughter fails and no direction as to what interest K has until attaining the age of 21. The Will includes the STEP Standard Provisions First Edition.
Father died when K was 14 and she is now 18. We need to deal with K’s half share of some rental income and the question of whether the gift is vested or contingent will determine the tax treatment. I was working on the basis that the gift is contingent so that this would be an 18 to 25 trust with income tax chargeable to the trust at the trust rate and, if income is paid out of the trust to K (which it hasn’t been so far), she would be able to claim some or all of it back on the basis that she does not pay tax/pays tax at a lower rate. However, the more I have looked at it (and I have looked everywhere I can think of, including Williams on Wills and previous discussions on this site), I am thinking that it is actually a vested gift such that the income tax should be chargeable to K.
Many thanks for any guidance you can provide.
Pickering & Butters LLP