CG32080 - Death and Personal Representatives: Non-retrospective variations: deleting trust

If the effect of a non-retrospective variation is that a trust that would have come into existence under the terms of the will or intestacy no longer comes into existence the treatment will differ somewhat from that set out above for other cases of non-retrospective variations. This is because the legatees under the will or intestacy would have been the trustees but because the trust does not come into existence assets do not pass to that person when the assets vest - not even for the purpose of delivering the assets to an assignee.

The simplest case is where the terms of the will or intestacy create a life interest trust for one person, A, with remainder passing to another person, B, absolutely. If the non-retrospective variation deletes the trust in favour of A then B will be entitled to take the property absolutely when the assets vest. Thus the trust will never come into existence and the assets will not vest in the trustees at any time. Instead, on vesting, the assets will vest directly in B.

Because B’s right to the assets derives partly from the original will or intestacy, B should be treated as acquiring those assets partly as legatee and partly as assignee. The proportion of the asset that B acquires as legatee should be taken as

actuarial value of B’s original interest as remainderman

actuarial value of A’s original interest as life tenant + actuarial value of B’s original interest as remainderman

If the non-retrospective variation does not simply extinguish one life interest in favour of providing the remainderman with an absolute interest you should attempt to apply the principles set out in the simple case detailed above to the more complex case.

Personal representatives

In the simplest case example above, to the extent that the asset passes to B as assignee, the personal representatives should be regarded as making a disposal of that fraction of the asset at market value on the date of vesting. A capital gain or allowable loss may therefore accrue to them on that proportion of the asset. The remaining interest in the asset should be regarded as passing under cover of TCGA92/S62 (4) at an appropriate proportion of probate value.