Liferent trusts—Scotland
Produced in partnership with Pete Murrin of Turcan Connell

The following Private Client practice note produced in partnership with Pete Murrin of Turcan Connell provides comprehensive and up to date legal information covering:

  • Liferent trusts—Scotland
  • Liferent trusts
  • Lifetime trusts and Will trusts
  • Proper liferent
  • Income and capital interests and vesting of interests
  • Income interests under liferent trusts
  • Capital interests under liferent trusts
  • Protective trusts and liferents
  • Apportionment
  • Restrictions on creation of liferents

Liferent trusts—Scotland

Liferent trusts

A liferent trust (or trust liferent) is a trust which, when settled, confers a use and income benefit, or both, in the trust property upon a beneficiary or beneficiaries. The beneficiary enjoying the use or fruits of the trust property is known as the liferenter.

Liferent trusts will sometimes be referred to as interest in possession (IIP) trusts or life interest trusts (the preferred English nomenclature)—see Practice Note: Creation of trusts—life interest trusts.

As a liferent interest is personal to the liferenter, it will, subject to the terms of the trust deed, subsist until such time as the liferenter either dies or the liferent terminates, in whole or in part, for another reason (eg at the instance of the liferenter).

The death of a liferenter will commonly free the whole of the trust property from the liferent. However, it is possible for a proportion of trust property to be made free of the liferent and the remaining proportion to be retained on such trusts.

On termination of the liferent, the trust property set free from the liferent will ordinarily be dealt with in one of two ways:

  1. it will vest in defined ultimate capital beneficiaries (referred to as fiars), or

  2. it will fall to be held on discretionary trusts for the benefit of one or more of a number of potential capital beneficiaries at the discretion

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