Q&As

In a life interest trust where the life tenant has already disclaimed their life interest, is it possible for the life tenant and remainderman to enter into a deed of variation recording the fact that the life tenant is to take absolutely?

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Produced in partnership with Lynne Counsell of 9 Stone Buildings
Published on LexisPSL on 22/10/2018

The following Private Client Q&A produced in partnership with Lynne Counsell of 9 Stone Buildings provides comprehensive and up to date legal information covering:

  • In a life interest trust where the life tenant has already disclaimed their life interest, is it possible for the life tenant and remainderman to enter into a deed of variation recording the fact that the life tenant is to take absolutely?
  • Disclaimer by the life tenant
  • Deeds of variation
  • Taxation requirements
  • Consideration
  • Summary

In a life interest trust where the life tenant has already disclaimed their life interest, is it possible for the life tenant and remainderman to enter into a deed of variation recording the fact that the life tenant is to take absolutely?

Disclaimer by the life tenant

This Q&A envisages that the life tenant has already validly disclaimed their life interest. The consequences of a disclaimer are as follows:

  1. the disclaimer must be absolute and the disclaiming beneficiary cannot retain any benefit. One gift can be disclaimed (eg a legacy) and another retained (eg a share in residue)

  2. the disclaimed benefit falls back into residue and is distributed in accordance with the devolution of the estate

  3. the disclaimer can subsequently be retracted provided no person has altered their position in reliance on the disclaimer

Generally, see Practice Note: Failure of gifts—disclaimer and acceptance.

Deeds of variation

Unlike a disclaimer, a deed of variation can redirect the beneficial interests under the trust. This is usually done for tax purposes after death, see Practice Note: Variation of Will or intestacy after death. The variation can benefit any person, whether or not they are a beneficiary.

Taxation requirements

The provisions in section 142

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