I am instructed on a probate matter where the Will creates a LIT over 1/2 the house (which has been severed) for the surviving spouse. My query relates to the drafting of the remaindermen interest:
Clause 6 states that the property fund shall be held upon trust for the life tenant for life & subject to that held ‘upon the like trusts as are declared below in relation to the Trust Fund’.
The Trust Fund appears to refer to the residue which is left to the spouse if she survives by 28 days and subject to that to the children.
My reading of this is that the remainderman is the person entitled to the residue who is, of course, the life tenant (for the sake of completeness she has survived 28 days). I am wondering whether it is safe to ‘interpret’ this as reading the residue clause as if the LT had died? If not I was wondering whether the effect is to extinguish the trust as the LT and remainderman are the same person and therefore she has the entire interest.
I have seen this drafting before in Wills which I have been replacing and wonder whether my reading of it is wrong or whether it is bad drafting where the spouse/children are dealt with in the same residue clause?
Any help or guidance would be greatly appreciated.
Unfortunately, this is a too frequent drafting error.
I recommend you obtain and review the will instructions, as the likelihood is the intention was that the property fund should pass to those entitled to residue if the spouse did not survive the 28 day period.
If there has been a drafting error, it seems to me that rectification should be considered, and the drafters put on notice that the estate will look to them to bear the costs of that application.
Depending upon the precise circumstances, I understand that some counsel have opined that a will in the form in question can be construed as intended by the testator without the need for rectification, but that must always be fact specific (and I would not adopt it without a strong written opinion that I also understood)
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Your interpretation is indeed correct. It was bad Will drafting and undoubtedly was not intended. As you have realised, on the life interest In the share of the property ceasing on the death of the life tenant, the share of the property should have passed to the children and not allowed to fall into residue. Indeed I usually ask clients if instead of giving each other a life interest in their share of the home, they instead give each other a right of occupation, thus ensuring that should the survivor need to go into a nursing home, he/she will not be entitled to income from the proceeds of sale,
I agree with your reading and that it seems to be a mistake but I don’t think you can construe it too easily. You could ask the surviving spouse to do a DoV to confirm/clarify it (assuming she agrees) which should sort it out assuming income tax never becomes an issue.
Thank you all for your assistance so far. I believe the surviving spouse does not have sufficient capacity to assist.
If all of the possible ‘intended’ remaindermen agree not to seek rectification does that leave the spouse with an absolute interest (setting aside for a moment whether they would want to do this) and extinguish the trust or would the house only fall back into the current estate on her death? I cannot quite keep this one straight in my head.
If, having been fully informed of the situation, the intended remaindermen decide not to take any action then, yes, as the will gives the widow both a life interest and the immediate right to capital, the interests will merge to enable her to take the property freed from the trusts.
The beneficiaries will need to be made aware of the concerns over the potential drafting error and should usually be advised to take their own legal advice before deciding upon the course of action to adopt.
Should the beneficiaries not be unanimous on the way forward, it open to any of them to pursue an application for rectification, if considered appropriate, not just the executor.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
As you say that the surviving spouse no longer has capacity, is it possible that her Will mirrored that of her late husband, in which case the children will inherit the whole on her death. There would be little point then in them seeking to have the terms of their father’s Will altered as regards his share of the house. Admittedly if their mother is in a nursing home, the whole of the value of the house will be included in any assessment, whereas had the will be drawn as intended, only a 1/2 share would be included.