Can a trust beneficiary specify what happens to their interest if they die?

chromedome

I am looking to find out if a beneficiary of a trust can specify what happens to their interest in the event of their death. I've approached a local wills and probate company, who prepared mine and my wife's wills, but after an initial communication, I can no longer get them to respond.

In 1981, my late grandmother left her house in trust, with the beneficiaries being her daughter's (my mother) children, which is my brother and I. My mother is the sole remaining trustee, and lives in the house currently. When she passes, the trust beneficiaries receive equal shares in the house.

For 83, my mother is in rude health, and with me having recently had cancer treatment, my brother and I are wondering if we can make provision for what happens to our share should either of us die before her.

I appreciate we will need a professional to look at the exact terms of my Grandmother's will and the trust details, but I just wanted to get a sense of if this is possible.

Thanks in advance.

HappyHarry

It will depend on whether you and your brother are absolute beneficiaries or whether your mother has discretionary power over the beneficiaries.

chromedome

https://forums.moneysavingexpert.com/discussion/comment/81917376#Comment_81917376

I am pretty certain we are absolute beneficiaries.

HappyHarry

In that case it will depend very much on the wording of the will as there are many potential outcomes. I would strongly suggest engaging a (different) solicitor to review the wording and get your answers.

If you post the exact wording of the will here then one of the forum members more experienced than me in this area might be able to answer your question, but ultimately you would want paid-for advice to put your mind at rest.

Keep_pedalling

Was your mother given a life interest in the property thereby creating a immediate post death interest trust?

poseidon1

https://forums.moneysavingexpert.com/discussion/6658986/can-a-trust-beneficiary-specify-what-happens-to-their-interest-if-they-die

Its possible, but entirely dependant on whether the trust instrument was drafted in such a way as to give you and your siblings a general power of appointment over your interests in remainder of the trust fund.

Such a power would usually extend to remaindermen being able to direct in their Wills where there shares go if they pre decease the life tenant ( your mother).

That said however, it is my experience that the lower echelon law firms rarely provide such sophiscated dispositive powers in favour of remaindermen, and usually settle for the trust deed to provide that the remaindermen shares either to pass direct to their own issue, or in the absence of issue on to their surviving siblings.

Having regard to the above, we would need to see the precise trust clauses to see what powers ( if any ) had been reserved in favour of the remaindermen.

Regardless as to whether such powers were provided, what the remaindermen should be able to do during their own lifetimes is to gift/ assign their expectant shares in the trust fund direct to their own children.

Such gifts are both IHT free when made ( no need to survive 7 years since reversionary interests are excluded property) , and no CGT arises regardless of the capital appreciation the trust fund may have accrued to that point ( operation of section 76 TCGA 1992 ).

chromedome

https://forums.moneysavingexpert.com/discussion/comment/81917783#Comment_81917783

Here is the text of the trust document, plus an image of my grandmother's will text. I have made a half baked attempt at removing some identifying details so, for clarity, my mother is F. Moon's daughter, and her brother (the other trustee) is deceased.

TRUST TEXT

I, (My mother's name) of (property address) in the County of (County) as Personal Representative of Fanny Moon late of (property address) aforesaid deceased do this 2nd day of April One thousand nine hundred and eighty-one.

1. As Personal Representative assent to the vesting in myself and Richard Moon of (his address) Chesterfield in the County of Derbyshire (hereinafter together called "the Trustees") of ALL THAT freehold property described in the Schedule hereto
   TO HOLD the same unto the Trustees in fee simple upon trust to sell the same or any part thereof with full power to postpone the sale and to stand possessed of the net proceeds of sale and other money applicable as capital and the net rents and profits until sale
   upon the trusts respectively declared concerning the same by the Will dated the Fourteenth day of June One thousand nine hundred
   and seventy-four of the said Fanny Moon deceased.
2. Declare that the statutory power to appoint new trustees applies to this Assent.
3. Acknowledge the right of the Trustees to the production of the probate of the said Will of the said Fanny Moon deceased which was granted to me on the Nineteenth day of January One thousand nine hundred and eighty-one out of the Ipswich District Probate Registry_ AS WITNESS the hands of the parties hereto the day and year first before written.

THE SCHEDULE above referred to ALL THAT piece or parcel of freehold land situate near (property address) in the County of Suffolk together with the dwellinghouse and premises erected thereon or on some part thereof All Which said property is known as (property address) aforesaid and is for the purpose of identification only shown edged red on the plan annexed to a Conveyance dated the Twenty-first day of January One thousand nine hundred and sixty-five and made between Hugo James Thomas Waugh of the one part and Leonard Moon and the said Fanny Moon of the other part TOGETHER ALSO WITH the right of way and the benefit of the covenant referred to in the said Conveyance.

poseidon1

OP have examined what transpires to be a very 'old school' interest in possession Will Trust for the benefit of your mother, drafted in the early 1970s and virtually devoid of any of the bells and whistles expected of more modern life interest trusts,

As for the rights of the trust remaindermen ( you and your sibling), these are highly restricted and in no way accommodates any of the depositive powers of appointment I mention in my post.

The key part of the will ( from your perspective) reads:

" ….upon death of my said Daughter…..IN TRUST for all the children of my said Daughter as shall be living at her death and who shall then have attained or shall thereafter attain the age of majority and if more than one in equal shares for their own respective use absolutely.…"

Therefore no powers of appointment and you all have to survive your mother to benefit from the trust fund. Any sibling that predeceases your mother, their share is forfeited and accrues to the surviving siblings.

This probably does not prevent any of you from gifting your expectant shares to your own children during your lifetime ( as suggested), but such gift will fail if you do not then go on to survive your mother.

If the idea of gifting your reversionary interests during your lifetime appeals, you will need to engage a specialist STEP qualified solicitor to draft the necessary deed of assignment, having regard to the limitation placed on your reversionary rights.

chromedome

https://forums.moneysavingexpert.com/discussion/comment/81918541#Comment_81918541

Cheers for the info, very helpful (if not entirely what we wanted to hear). I'll seek to get 'official' confirmation.

Thanks again.