CG33306 - Basic terms of trust law as applied to CGT: marriage settlements

Marriage settlements, or marriage contracts, as they are called in Scotland, are rarely created these days, but many are still in existence. The standard form provides that property comes from one spouse or the other (or their families). There are two funds, one for each spouse. Each spouse starts with a life interest in their own fund. When one dies, the other now has a life interest in the deceased’s fund. Finally the property goes to their children on whatever trusts have been appointed by the parties by deed or will. In these circumstances it may be accepted that there are two separate settlements, even though at the end of the day there may be identical trusts for their children on both funds. If however this basic pattern is not followed, because all the property comes from one party, or the funds are not separated, or the trusts to apply after death are already specified, then this is one settlement with two settlors.