Call Trudy Rogers on 01635 569670 | Email: info@rogers-legal.co.uk

Interest in Possession Trusts

These trusts give the main beneficiary –the ‘life tenant’ – the right to receive the income or enjoyment of the trust assets for a set period of time or whilst certain conditions exist. This right to income or enjoyment of the trust assets must be exclusive to the life tenant so that no other beneficiary has the right to the income or enjoyment. There may be more than one life tenant so that the life tenants can jointly share the right to the trust assets, but to the exclusion of other beneficiaries. At the end of the interest of the life tenant(s), other beneficiaries usually have interests that follow, but these are separate ‘rights’ with separate tax issues.

The tax treatment of a trust whereby someone has a right to enjoy the trust assets to the exclusion of other beneficiaries will depend upon when the trust was created and how the trust was created following changes in tax legislation in 2006.

The life tenant of an interest in possession may have the right to pass on his/her interest under their Will or during their lifetime - this will have tax consequences. It should also be considered that the right to income or enjoyment of trust assets from an interest in possession trust is a ‘benefit’ that the life tenant must disclose on any financial assessment.

If you are a trustee, a beneficiary or thinking of setting up a trust, please contact Trudy Rogers on 01635 569670 or Trudy.Rogers@rogers-legal.co.uk