Q&As

A deceased's Will created a life interest in their share of a property for their partner, with remainder going to the deceased's child. The property has been sold within two years of death and the life tenant and remainderman have agreed to a split of the proceeds. Would a variation of the Will or a termination (partition) of the trust be the best option, bearing in mind the tax consequences?

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Produced in partnership with Lynne Counsell of Addington Chambers
Published on: 26 April 2021
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This Q&A assumes that the child in question is an adult and also, for Inheritance tax (IHT) purposes, that the Life tenant holds a qualifying interest in possession under the trust.

Life interest trusts

A life interest trust gives the life tenant an interest in trust assets for their lifetime, which is usually the entitlement to receive the income from the assets or to live in a property. Upon that beneficiary’s death, the assets pass to one or more remaindermen. For tax purposes, the life tenant has an interest in possession, namely ‘a present right of present enjoyment in the net income of the Trust property without

Lynne Counsell
Lynne Counsell

Barrister, Addington Chambers

Lynne has been in traditional Chancery practice for some thirty years, specialising in probate matters, construction of wills and trusts and also financial services and drafting.

Lynne was for some years counsel for Tower Hamlets, representing them on landlord and tenant cases and counsel for Bedford Building Society representing it on mortgage cases.

Lynne has written or updated over fifty books, including writing the initial volume of Atkin’s Court Forms “Financial Services” and updating Halsbury’s Laws on Injunctions. Lynne was also co-author of two editions of “Insider Trading” and co-editor and one of the writers of “Chancery Practice and Procedure.”

Articles include “Marketing of Investments” for the Law Society Gazette and “The Doctrine of Mutual Wills” for the Trust Quarterly Review. Lynne won one of the few cases on mutual wills in the last fifty years – Charles v Fraser (2010).

Lynne has drafted the standard unit trust for the government of Nigeria, the rules and related documentation for various building societies and clubs, shareholder agreements, company takeovers compliance documentation for certain banks as well as wills and trusts.

Lynne was awarded the 2017 Corporate international Magazine Global Award – “Investment Contracts Barrister of the Year in England”.

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Life interest definition
What does Life interest mean?

An entitlement to trust income or to the use of trust assets, but not the capital. Also called an possession'>interest in possession.

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