PART III SETTLED PROPERTY

CHAPTER I PRELIMINARY

46AF1Contract of life insurance entered into before 22nd March 2006 which on that day is settled property in which interest in possession subsists

1

Subsections (2) and (4) below apply where—

a

a settlement commenced before 22nd March 2006,

b

a contract of life insurance was entered into before that day,

c

a premium payable under the contract is paid, or an allowed variation is made to the contract, at a particular time on or after that day,

d

immediately before that day, and at all subsequent times up to the particular time, there were rights under the contract that—

i

were comprised in the settlement, and

ii

were settled property in which a transitionally-protected interest (whether or not the same such interest throughout that period) subsisted,

e

rights under the contract become, by reference to payment of the premium or as a result of the variation,—

i

comprised in the settlement, and

ii

part of the settled property in which the then-current transitionally-protected interest subsists, and

f

any variation of the contract on or after 22nd March 2006 but before the particular time, so far as it is a variation that—

i

increased the benefits secured by the contract, or

ii

extended the term of the insurance provided by the contract,

was an allowed variation.

2

For the purposes of the provisions mentioned in subsection (3) below—

a

the rights mentioned in subsection (1)(e) above shall be taken to have become comprised in the settlement, and

b

the person beneficially entitled to the then-current transitionally-protected interest shall be taken to have become beneficially entitled to his interest in possession so far as it subsists in those rights,

before 22nd March 2006.

3

Those provisions are—

  • section 3A(2) above;

  • section 5(1A) above;

  • section 49(1A) and (1B) below;

  • section 51(1A) and (1B) below;

  • section 52(2A) and (3A) below;

  • section 53(1A) and (2A) below;

  • section 54(2A) and (2B) below;

  • section 54A(1A) below;

  • section 57A(1A) below;

  • section 58(1B) and (1C) below;

  • section 59(1) and (2) below;

  • section 80(4) below;

  • section 100(1A) below;

  • section 101(1A) below;

  • section 102ZA(1) of the Finance Act 1986 (gifts with reservation); and

  • sections 72(1A) and (2A) and 73(2A) of the 1992 Act.

4

If payment of the premium is a transfer of value made by an individual, that transfer of value is a potentially exempt transfer.

5

In this section—

  • “allowed variation”, in relation to a contract, means a variation that takes place by operation of, or as a result of exercise of rights conferred by, provisions forming part of the contract immediately before 22nd March 2006;

  • “transitionally-protected interest” means—

    1. a

      an interest in possession to which a person was beneficially entitled immediately before, and on, 22nd March 2006, or

    2. b

      a transitional serial interest.