Appropriation of part of house to charities for CGT

I am dealing with an estate where 90% of the residue passes to individuals and the remaining 10% to charity. The charity wishes to claim CGT exemption. Is it possible to appropriate a share, ie 10% to charity? If so, must the other 90% be appropriated to the individual beneficiaries?

Hazel Jones
Garden House Solicitors

There is no particular reason why value equating to 10% of residue cannot be appropriated to the charity and sold on its behalf.

When doing so, though, it will be necessary to revalue the assets of the estate (applying Re Charteris, 1917) to be certain the charity receives no more than its share.

Additionally, you will need to be mindful that if no “equal” distribution is made to the other residuary beneficiaries, there will be an unequal distribution and they will be entitled to be compensated for this out of the charity’s share.

If the remaining assets are not appropriated to the other beneficiaries, but are sold out of the estate, the charity might raise a challenge if such disposal(s) gives rise to a CGT liability in the estate.

Paul Saunders