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Issues: Whether the properties settled on trust by the deceased were deemed to have passed on her death and were liable to estate duty.
Analysis: The estate duty charge under Section 5 of the Estate Duty Act, 1953 applies to property passing on death, while Section 22 excludes trust property only where the beneficiary has bona fide assumed possession and enjoyment at least two years before death and retained it to the entire exclusion of the deceased. The deceased had reserved to herself a right of residence in one school cottage for life and a monthly payment from the funds of the school. The right of residence meant that the beneficiary never obtained exclusive possession of that property. The monthly maintenance was not a mere personal allowance detached from the settlement but was made payable out of the school funds, which were the income and profits of the trust properties, thereby creating a legally enforceable benefit referable to the settlement and a charge upon the trust estate.
Conclusion: The trust properties did not fall within the exclusion in Section 22 and were deemed to have passed on the deceased's death.
Final Conclusion: The question referred was answered against the accountable person and in favour of the revenue, so the entire trust estate was held liable to estate duty.
Ratio Decidendi: Where the settlor reserves a life interest, residence, or maintenance payable out of the settled fund, the beneficiary is not in entire exclusion of the settlor and the property is treated as passing on death for estate duty purposes.
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