MWPA 1882 and powers held by the trustees to vary beneficiary

ruthiebusybee

Hi All

Hoping one of the Trust gurus can help out......

We have a client, recently deceased, he was sole life assured on 2 x NU WOL plans, effected in 1964, one absolute for his wife and one absolutely for his son, whether alive or not, ( but the son died in 1999), both subject to the provisions of the MWPA 1882.

The word absolutely in the provisions may prove the clincher here, but does anyone know if the trustee (the wife) can distribute the trusts to her two surviving children, rather than her deceased son's estate and herself?

richardgough

Interesting Q.

In looking into this the starting point would be to refer to the trust deed to see if powers are explicitly given. (For example, Aviva has a flexible trust written under the Act with trustees having powers to alter beneficiaries.)

Whilst not a definitive answer, my thinking is that if such flexibility is not expressly given then the ability to change a beneficiary does not exist. I do not believe that the Trustee Act 2000 can override the principles (& restrictions) behind the 1882 Act.

Even if such powers to change beneficiaries did exist I am not sure they could be used in this case anyway - certainly not without explicit consent from the current beneficiaries - and such a change would be a PET from the current life tenant in any case.

So, from an IHT perspective, there is no difference in the proceeds being paid out to the named beneficiaries and then they subsequently gift the funds elsewhere.

ruthiebusybee

Thank you Richard

Some of it has played out as hoped for, in that assignments/Deeds were completed back in the 90s it has turned out, except that a portion, albeit smaller, was still left to the now deceased son, so if his surviving wife was to pass on her default share to the other two, the PET situation is an interesting consideration there.

Thanks so much for your reply!

Ruth