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The Division of A Trust Fund Between Life Tenant and Reversioner and the Incidence Of Estate Duty

Published online by Cambridge University Press:  11 August 2014

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Extract

Heavy taxation by Estate Duty and Income Tax has recently led to a serious consideration of the avoidance of this onerous liability by means of gifts made by a donor in his lifetime and, in the case of a settled fund, of an exchange of benefits where the Beneficiaries can come together and bring the trusts to an end.

If, in the case of a Settlement, Life Tenant and Reversioner can by mutual agreement arrange to divide the Fund between them, the Life Tenant may benefit considerably by realizing a sum in excess of the market value of his interest and using it to provide as much or more spendable money than before. He may also promote a smaller liability to Sur-Tax. The Reversioner may succeed in securing a cash sum larger than he could expect at a future date on the death of the Life Tenant reduced as it would be by Estate Duty at the aggregable rate applicable to the Life Tenant.

Type
Research Article
Copyright
Copyright © Institute of Actuaries Students' Society 1951

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