PET from IPDI, GWR position

If LT (deceased’s daughter) agrees to terminates an IPDI she has in a property so ½ to her absolutely, ½ to brother (daughter would receive 1/2 sale proceeds if property sold while she is alive as is Right of Occupation), am I right this:

a) a PET of ½ to brother with GWR?
b) If so, is GWR avoided if LT ‘buys’ the brother’s ½ share but with a charge in favour of the brother?

The goal (if possible) is to reduce the effect of aggregation on the daughter’s estate as she only has the single NRB available.

Karl Taylor
Parker Rhodes Hickmotts

I should add, it has been over two year since the Testator died.

Karl Taylor
Parker Rhodes Hickmotts

Where on termination the life tenant becomes absolutely entitled to the whole or part of the property in which the interest subsisted no charge to IHT arises [IHTA 1984 s 53(2)].

There will be an IHT charge with respect to the remainder interest of the brother as the life tenant will be treated as having made. a transfer of value [IHTA 1984 s 52(1)]. But the life tenant does not seem to continue to enjoy any benefit from the property in which his former interest subsisted? In which case no GWR?

No GWR arises on sale. The sale by the brother of his reversionary interest, assuming at arm’s length, will give rise to a transfer of value by the life tenant [IHTA 1984 s 55].

Malcolm Finney

Thank you Malcolm. But if the LT continues to live in the property, though due to the termination of the IPDI it is owned absolutely between her and her brother, does that constitute a GWR situation? There is unlikely to be a sale for some time. As the goal is to remove aggregation, a GWR situation would lead to the same IHT outcome (and CGT for brother). Hence we are unsure if LT then buys the brother’s share, probably with a charge, if that removes the GWR concern. Or if there is a GWR situation at all.

We are looking at other options but this is one we believe could do the job.

Thanks in advance

Karl Taylor
Parker Rhodes Hickmotts