Settled estate

A beneficiary who does not receive any capital, but whose share is restricted to the income only, is said to have an interest in a settled estate. For example, the willmaker may have left the income from the estate to a spouse for their life, and after the spouse’s death, the capital to their children. The obligations of the trustee then are to invest the capital fund, to preserve the value of the investment for the children, and to pay the income to the spouse during their lifetime.

The manner in which any such settled share is invested depends on the powers given by the deceased in the will. If these powers are not set out in the will, they are restricted to the investment powers for trusts set out in the Trustee Act. See also the Settled Land Act 1958 (Vic) and the Property Law Act 1958 (Vic) (“Property Law Act”).

The law in this area is very complex and professional advice should be taken both before putting such provisions in a will or where such a provision appears in a will being proved.