IHTM20154 - Policy settled on its own trusts: Examples (England, Wales and Northern Ireland)

The following 8 examples apply to England, Wales and Northern Ireland.

1. If S settles a policy on their life

for the benefit of A for life with remainder to B -

A has an interest in possession.

2. If S settles a policy on their life

for the benefit of A whom failing for B -

A has a defeasible interest in possession.

3. If S settles a policy on their life

for the benefit of such of A, B and C as S appoints and in default for D -

D has a defeasible interest in possession unless S31 Trustee Act 1925, or S32 of the Trustee Act (NI) 1958 in Northern Ireland, applies and D is an infant in which case they do not have an interest in possession until they reach majority or marry.

4. If S settles a policy on their life

for the benefit of A whom failing for S -

A has an interest in possession (but if they die before S the “reverter to settlor ( IHTM16121)” exemption will apply).

5. If S settles a policy on their life

for the benefit of such of A, B and C as survive S and, if none, for the benefit of the last to die and the trust carries the intermediate income -

A, B and C have contingent interests until the death of S and have interests in possession unless S31 Trustee Act, or S32 of the Trustee Act (NI) 1958 in Northern Ireland, applies and any is an infant.

6. If S settles a policy on their life

for the benefit of such of A, B and C as survive S and, if none, for the benefit of the last to die and a trust for accumulation of any income arising before the death of S has to be implied -

no-one has an interest in possession during the lifetime of S unless only one of A, B and C is alive in which case there is only one beneficiary.

7. If S settles a policy on their life

for the benefit of such of A, B and C as survive S or attain 21 and, if none, then for the benefit of the last to die and the trust carries the intermediate income

IHTA84/S71 is in point and, if the Family Law Reform Act 1969 applies, S31 Trustee Act, or S32 of the Trustee Act (NI) 1958 in Northern Ireland, would apply until a beneficiary attained 18 when they would have an interest in possession.

8. If S settles a policy on their life

for the benefit of such of the children (unnamed) of S as survive them and, if none, for the benefit of the last to die, and S has at least one child -

any adult child would have an interest in possession provided the contingent interest could be construed as carrying the intermediate income and no trust for accumulation had to be implied - see Child’s Trustee Co v IRC [1960] I Ch 534.