Discretionary trust rights are not an interest in possession where beneficiaries lack enforceable income entitlement.

Beneficial interests under a discretionary trust did not amount to an interest in possession for estate duty purposes where the objects had no enforceable right to income, only a right to be considered by trustees. The accumulation beneficiaries' future interests could not be combined with those discretionary rights to create a composite interest in possession. The statutory scheme contemplated an interest extending to the whole or a definite part of the income, which was absent. As a result, the advances made out of trust capital were not within section 43 of the Finance Act, 1940 and no estate duty was payable on the advanced funds.

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Issues: Whether the beneficial interests of objects of a discretionary trust, coupled with the interests of accumulation beneficiaries, constituted an "interest in possession" within section 43 of the Finance Act, 1940 so that the advancements made out of trust capital were chargeable to estate duty on the son's death.

Analysis: The relevant charging provision required an interest limited to cease on death to have become an interest in possession before its disposition or determination. The Court held that the objects of the discretionary trust had no enforceable right to receive any income, only a right to be considered by the trustees, and that this did not amount to an interest in possession. The accumulation beneficiaries' interests were future interests only and could not be combined with the discretionary objects' rights to manufacture a composite interest in possession. The statutory scheme in section 2(1)(b) and section 7(7) of the Finance Act, 1894 contemplated an interest extending to the whole or a definite part of the income, which was absent here.

Conclusion: The advances were not caught by section 43 of the Finance Act, 1940 and no estate duty was payable on the advanced funds.

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