My colleague has been asked to prepared a deed of variation for a Will creating a life interest for the wife.
The Will states:
“I give my House with [list of contents] to my Trustees to hold them on trust for sale but with power to postpone the sale and in accordance with the following directions:
(a) My wife X may live in the House and use it as her principal place of residence and have the use of the effects in connection with it for her lifetime.
…
(c) When this trust ends my beneficial interest in the House… shall pass to my daughters A, B and C in equal shares”
One of the daughters pre-deceased the father leaving two children.
Q1 - does the wording suggest that the daughters have a vested interest in remainder on the death of the testator or is it contingent on surviving the life tenant?
Q2 - do the deceased daughter’s children inherit her share of the trust? There is no reference to section 33 Wills Act in the Will.
The wording in the gift of the residue to the daughters is the same as the above.
I would welcome the forum’s views on the interpretation of the clause.
Perhaps I am missing something, but does not the clause already create a life interest for the wife, both in the house and effects and the proceeds of sale?
If the proposed variation is intended to include administrative provisions, I do not believe that it would be within s.142 IHTA 1984 (unless HMRC took the view that the deed effected a resettlement).
On the s.33 point, I believe this will apply, provided that the daughters’ interests vest on the testator’s death. If they only vest on the termination of the trust, my understanding is that s.33 cannot apply.
Based upon the wording quoted, it seems to me that the daughters’ interests may well be deferred until the trust ends (compare this to where a will uses the “subject thereto” term) and so do not vest on the testator’s death. If that is the case, in the absence of words of survivorship, has the gift to the deceased daughter failed so that her share of the property falls into residue.
If residue is given to the daughters absolutely, then s.33 will apply so that the deceased daughter’s children will take her one-third of residue.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals