CGT & jointly owned property


(Sally-Ann Joseph) #1

I have an estate where deceased purchased property as joint tenants with her two children, children made no contribution to purchase price.
The straight forward CGT position seems to be CFT uplift on 1/3 with the children base costs being 2/3 of original purchase price, mother having made a GWROB.
However, I am wondering whether it could be argued that when the property purchased the deceased created a trust of land with children as trustees to allow her to live in the property for the rest of her life, thereby having an interest in possession of the whole, which will allow for CGT uplift on the whole.

Would appreciate other’s opinion.

Sally-Ann Joseph
QS Rose & Rose


(andrew.goodman) #2

I don’t see how you can generate a life interest trust from the basic facts without some clear evidence (there may be LPA requirements as well). A simpler scenario, also derivable from the same facts, would be that they all held the property as trustees for her absolutely and the children were trustees to ease the probate process but you would again need some evidence of that.

Can the children or the conveyance offer any explanation? If the children thought they were simply being given a 2/3 share of the property then I would be very reluctant to submit an alternative interpretation.

Andrew Goodman
Osborne Clarke LLP


(malcfinney1) #3

Surely the facts must speak for themselves.
At the date of purchase (monies supplied by mother only) what was the agreement between the three parties? Presumably, mother indicated to the children what she had in mind?

Who appears on the legal title? What was stated on the LR documentation with respect to the respective beneficial interests or in any separate declaration of trust?

Whilst rebuttable, doesn’t the presumption of advancement apply?

In the absence of any supporting documentation I struggle to see how you could successfully argue for an interest in possession for mother (and remainder to children).

Malcolm Finney


(Sally-Ann Joseph) #4

My understanding now is that the joint tenancy was created so that the children would have control over the sale of the property should mum need to go into care.

No documentation to evidence the fact, no professional advice given at the time.

Sally-Ann Joseph
QS Rose & Rose


(Haroon) #5

I’m not sure what ‘control over the sale of the property’ means. If mum went into care, they still would not have control, unless there was an LPA etc… If it was given to avoid care fees, and mum never went into care, then the proposed plan seems to have backfired as it seems a gift was made. That said, as others have said, the facts should speak for themselves. When was the gift made? Have the children ever had any ‘ownership’ rights to the property. That is, did they share bills, pay for improvements, or even have a key? In the absence of any of this, I think I have come across a Counsel’s opinion which indicates that a life interest trust may be arguable, but I can’t recollect if more evidence was required/available.

Haroon Rashid
I Will Solicitors Ltd


(Julian Cohen) #6

That’s clear enough. It appears, then, that any “ownership” by the children was in fact in their capacity as bare trustees for the deceased. the property was owned beneficially by the mother, so the CGT position (if there is a disposal) is that there is only one person’s allowance, and the IHT position is that any IHT is payable on the value of the entire property by the estate.

Julian Cohen, Solicitor


(andrew.goodman) #7

It doesn’t sound like you could hang an IIP on those facts but if the children believed that they were installed purely as an administrative measure then that could rebut the presumption of advancement so that the property was held on bare trust / nominee for the mother, leaving it in her estate and gaining the CGT uplift. It would also mean that you did not have to be concerned about GROBs.

It would of course mean that the beneficial interest in the property formed part of the estate and passes in accordance with the will.

Andrew Goodman
Osborne Clarke LLP


(Sally-Ann Joseph) #8

I propose to go back to the conveyancer but I understand that no actually advice was given, it was decided to do it this way to make mum feel more comfortable, having recently lost her husband and to ensure that the children could take charge of the property should she need to go into a care home (this could have been achieved by an LP/EPA).

The children did not think they were being given a 2/3 share between them, the purpose of the joint tenancy was to ensure that no shares of the property would revert to their spouses if either of them died.

Sally-Ann Joseph
QS Rose & Rose