Life Policies: Married Women’s Property Act policies: the rule in Phipps v Ackers
The rule in Phipps v Ackers (1842) 9 CI & Fin 583 was described as follows by Lord Denning in Re Kilpatrick’s Policies Trusts, Kilpatrick v IRC  Ch 730
‘When property is given in these terms: to A ‘if’ or ‘when’ or ‘as soon as’ a time is reached, but that if A dies before that time, then the property is to go to B; in such a case A takes not a contingent interest, but a vested interest which passes to him at once as soon as the gift is made but is liable to be defeated if he dies before the time. ‘
The rule means that ‘A’ is treated as beneficially entitled to the property up to the point where his interest is defeated and the property passes to ‘B’. The rule does not apply where there is evidence of a contrary intention so this can be a difficult area. The cases of Re Penton’s Settlement  1 WLR 248 and Re Mallinson’s Consolidated Trusts  1 WLR 1120 give some guidance as to how the courts approach these issues.
As the rule is concerned with the construction of a gift of capital it is not affected by any directions in the settlement as to the destination of intermediate income unless they are inconsistent with the existence of a vested interest - see Brotherton v IRC  1 WLR 610.
There is no equivalent rule in Scotland. Under Scots law a trust for A if living at the death of the life assured, and if not for B, would be regarded as postponing vesting until the death of the life assured. A trust for accumulation of any income arising before that event would be implied and there would therefore be no interest in possession. Even where, under Scots law, the interest of a beneficiary has vested in them but it is capable of being defeated, that would raise no entitlement in them to intermediate income - see Russell’s Trustees v Russell  SC 148.
Most policies, however, contain a specific provision designed to create an income interest in possession (IHTM16062).