I have a promissory note between H&W and A. H&W transferred a property to A and took a promissory note for £120,000.00 as collateral. H died appointing W as sole executor (and beneficiary).Following H’s death a Deed of Variation severed the joint tenancy on any H&W’s jointly owned assets - including the loan. The loan now needs to be repaid. Unfortunately W has lost capacity (since obtaining probate). Attorneys are appointed under an LPA for W. In order to recover the loan I am advised (by litigation department) that H’s executors need to assign his interest in the loan to W. As W is the executor can her attorneys appointed under LPA assign the interest as she is incapable of doing so?
I fear the legal department does not appreciate that a “severance” by deed of variation does not bring any former joint assets under the control of the executor.
On H’s death, both legal and beneficial ownership of the loan passed to W by survivorship. The deed of variation cannot change that – it is a post-death gift by W, made as at the date of the deed, dressed up for IHT purposes as being a gift by H.
The beneficial ownership of the loan is with W and whoever she gifted the other half to. The legal title may still be with W, but will not have vested in H’s estate.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals