CG37870 - Separate settlements: substance of the transaction

Having established that the new trusts are exhaustive and were created by a power in `wider form', the next step is to ensure that there is separate property, see CG33280 otherwise there cannot be a separate settlement.

 

The question whether what we now have is a separate settlement cannot be determined by the rigid application of rules. Instead as Lord Wilberforce said in Roome v Edwards, 54TC at 390A. `The question whether a particular set of facts amounts to a settlement should be approached by asking what a person, with knowledge of the legal context of the word under established doctrine and applying this knowledge in a practical and common sense manner to the facts under examination, would conclude.'

 

He then compares two typical cases, the conventional use of a special power of appointment, which would not normally give rise to a new settlement, and the exercise of a power `to appoint and appropriate a part or portion of the trust property to beneficiaries and to settle it for their benefit.' In the latter case it would probably be a new settlement.