IHTM35046 - Who should make the instrument?: interests of persons not party to the instrument (Scotland)

Where there is an alimentary liferent (IHTM16071) which has been enjoyed you should maintain that, except with the approval of the Court, such a benefit cannot be renounced and any agreement which purports to do so is void and cannot be approved by the beneficiary in question.  Moreover, the relevant Trust Funds so far as traceable remain impressed with the Trust Purposes.  The alimentary liferenter remains, therefore, beneficially entitled to such Trust Funds.

Any case in which this view is seriously challenged should be referred to Technical

No indication should be given to the taxpayer that we are prepared to accept any arrangement that the Court would be unlikely to accept under the Trust (Scotland) Act 1961.

Where any possible beneficiaries are minors or unborn children a rearrangement which is not clearly to the advantage of the minor or unborn beneficiaries, or in which their interests are not adequately provided for on an actuarial basis should not be accepted as a proper variation.

Where the taxpayers submit draft instruments which appear to be ultra vires you should point this out to them and suggest that they amend them as required, for example, by having the rights of minor or unborn beneficiaries actuarially calculated and provided for by insurance.

If the taxpayers refuse to follow such a suggestion or if they produce completed instruments that appear to be ultra vires the case should be referred to Technical.

You should keep in mind that if a rearrangement which is ultra vires is sought to be reduced by the taxpayers after completion, the provisions of IHTA84/S150 may apply.

A variation approved by the Court under the 1961 Trust (Scotland) Act on behalf of minor beneficiaries or others who are not sui juris is acceptable as a variation under IHTA84/S142.  You should regard it as one made by the beneficiaries themselves.

So far as rectification under s.8 Law Reform (Misc. Provns.) (Scotland) Act 1985 is concerned, any case where the taxpayers indicate they propose seeking rectification under these provisions should be referred to TG as should any case where the taxpayers argue that a deed can be rectified retrospectively without making formal application to the Court.

Any questions of vesting in considering whether an IoV is valid or other cases of difficulty should be referred to Technical.