Separate settlements: example
Under a settlement made by X, A and B are each entitled to half the income. On A’s deathhis son P will get half absolutely. On B’s death her daughter Q will get half absolutely.The values of their respective interests are, say:
|A’s life interest||£60,000|
|B’s life interest||£75,000|
Under the variation, executed when all the beneficiaries are adults, which is consideredto terminate the old settlement:
A takes 30 per cent of the property,
20 per cent goes to a new accumulation and maintenance settlement for P’s children,
B takes 25 per cent of the property,
the rest is held for Q for life with a remainder to Q’s son R.
P should be regarded as the settlor, for the purpose of the annual exempt amount, ofthe accumulation and maintenance settlement, because this is how his share has been dealtwith.
B and Q should be regarded as the settlors of the other settlement. Therefore one-third ofany gains will fall within TCGA92/S77 because Q is a beneficiary.