Malcolm Finney looks at some inheritance tax and capital gains tax issues in relation to surrenders of life interests.
Once a trust has been created, whether in lifetime or on death (under the deceased’s will), a change in a beneficiary’s future circumstances (for example, a need for cash or a wish for others to benefit immediately, not only on death) may require re-examining the interests arising under the trust.
Discretionary or interest in possession trust
In the case of a discretionary trust, no beneficiary of the trust possesses any beneficial interest in the trust property. Under an interest in possession trust, one or more of the interest in possession beneficiaries have a right to income as it arises to the trustees. For example, Joe may have an interest in possession in the income produced
