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HMRC internal manual

Trusts, Settlements and Estates Manual

Deceased persons: interests in residue: practical and computational aspects - death of beneficiary

If a beneficiary had an absolute interest in residue and dies during the administration of the estate, his personal representatives succeed to that interest for the remainder of the administration period. Where the administration is completed on or after 6 April 1995 the beneficiary is treated as having received income only to the extent that the rules set out in TSEM7606-TSEM7608 apply. Any residuary income relating to the period before the beneficiary’s death and not treated as the income of the deceased beneficiary is carried forward and treated as part of the residuary income of the deceased beneficiary’s estate.

If a deceased beneficiary had a limited interest in residue the interest will normally come to an end with the death of the beneficiary. Where death occurs during the administration of an estate the personal representatives may pay income to the estate of the deceased beneficiary. This is treated as the income of the deceased beneficiary for the year of death.

Refer to Trusts & Estates Technical Edinburgh for advice.