Commentary

I5.372 New trusts declared over existing trust property

IHT, trusts and estates

I5.372 New trusts declared over existing trust property

I5.372 New trusts declared over existing trust property

Where two different settlors transfer capital funds to the same settlement, the IHT legislation concerning settlements applies as if there were two distinct settlements (see I5.118, I5.131)1. However, it has been held2 that this provision will not apply to a settlement arising from a combination of an original disposition of capital upon trust, and a subsequent disposition by an income beneficiary of his interest so as to alter the trusts on which income is held without creating a separately identifiable fund of capital.

Such arrangements are sometimes called 'compound settlements'.

In such circumstances

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