W died March 2018. H survives her in his 90’s. W’s Will leaves the property worth £600k and owned as TIC’s in equal shares to H on a life interest, thereafter to their three children with sub for issue provided that they survive both parents, thus creating a relevant property trust and precluding a claim for the TRNRB in W’s estate upon H’s death. The residue worth another ca. £600,000 is in a DT (with a view to care home fee mitigation) with H being the main intended beneficiary and the three children and their issue in the class of beneficiaries.
Could H (who has capacity) disclaim his life interest thereby giving it to the three children who then do a DOV of W’s Will so as to give H a life interest in the property without the relevant property trust, so as to allow for a claim for the TRNRB in W’s estate to be made upon H’s death? Or has the relevant property trust been created upon W’s death?
Having read the question a number of times, I seem to be missing why the life interest to H creates a relevant property trust rather than being an IPDI.
If, on H’s death, the property passes to H & W’s children, or their issue, it seems to me that it passes absolutely to lineal descendants and, therefore, the residence NRB would be available.
In any event, if the will requires the children to survive both W and H to benefit from the property, with gift over to their issue if they do not so survive, can the children validly make a variation in reliance on the “rule” in Saunders v. Vautier?
I may not have made clear that I think the issue arises upon the death of H in respect of W’s share of the property whereby a relevant property trust of W’s share has been created by virtue of the stipulation that the children have to have survived both W and H, in order for them to inherit W’s share. I understand the HMRC IHT Guidance (albeit far from easy to understand) to be saying that the remaindermen have to have an IPDI (in this case in W’s share of the property) in order for the TRNRB to apply but that the stipulation that the remaindermen have to have survived both W and H instead creates a relevant property trust in W’s share, thus getting in the way of a claim for the TRNRB.
Erika Whitfield
Adlams LLP