Estate duty on trust property turns on change in beneficial enjoyment, so only the deceased's one-third share passed on death.

Under section 5 of the Estate Duty Act, the critical test is whether death effects a real change in the beneficial possession or enjoyment of trust property or a definable part of it. Where the trust deed showed that the deceased beneficially enjoyed one-third of the income, and the remaining interests continued unchanged for the other beneficiaries, only that one-third share was treated as the property passing on death. A contingent or defeasible interest becoming vested or more secure on death did not by itself amount to passing of the whole trust estate.

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Issues: Whether, on the death of the deceased, the whole of the trust estate or only one-third thereof passed so as to be includible in the principal value of the estate under section 5 of the Estate Duty Act, 1933.

Analysis: The decisive test under section 5 was whether, immediately before and after the death, there was any real change in the beneficial possession or enjoyment of the trust property or of any definable part of it. The trust deed provided that, during the relevant period, the deceased enjoyed one-third of the income, while the remaining income was enjoyed by the other beneficiaries, and on the opening of the corpus distribution the property was to be divided in a manner that reflected those beneficial interests. The mere fact that one beneficiary's interest became more secure or more valuable on the death, by reason of a contingent or defeasible interest becoming vested or indefeasible, did not itself amount to property passing on death under section 5. Only the share previously beneficially enjoyed by the deceased changed hands on her death; the interests of the other beneficiaries in the remaining portions were not affected in substance.

Conclusion: Only one-third of the trust estate, being the part previously enjoyed by the deceased, passed on her death and was liable to be included in the assessment; the whole trust estate was not chargeable.

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