If a client is the executor of an estate where a property is legally owned by the deceased but subject to a life interest (son of deceased) and value of the property is under £150,000, should the executor’s oath clause re settled land be removed, adapted or does the property form part of son’s estate and executor should not get probate? Hope that is clear!
Gabby Stafford
The oath wording arises from the old distinction between land held on a
strict settlement [when the legal estate was held by the tenant for life],
and land held under a trust for sale [when the legal estate was held by the
trustees]. In neither case should the land pass under the grant
administering the deceased’s own estate.
Gabby, you need to consider how the “life interest” in favour of the son
arose, and what form this takes. Generally speaking, strict settlements
were rarely created after 1925 except by accident/poor drafting; but could
no longer be created after 31st December 1996 [when Trusts of Land and
Appointment of Trustees Act 1996 took effect].
Please note, the above comments concern the assets passing under the grant
of probate/administration only; it is highly likely that different
considerations will apply for Inheritance Tax and/or other taxes.
Kevin Mullen
If the legal title is in the name of the deceased, a grant will be required to be able to transfer it to another party.
If the property is subject to a life interest in favour of the deceased’s son it would appear the deceased may have been a trustee of the land, in which case you will need to see the trust instrument to identify who has the power to appoint new trustees. If the deceased as the last trustee, then the power to appoint passes to his personal representatives.
As the property title is in the name of the deceased the land is unlikely to be subject to the Settled Land Act, but the position will be apparent after a review of the relevant trust instrument. In any event, if it is the son who is entitled to the life interest, it cannot be settled land within the estate of the deceased.
If the deceased was the person who settled the property, was this more than 7 years ago and, even if it was, have they retained any rights to it which might give rise to a reservation of benefit for IHT purposes?
Paul Saunders