I am dealing with a case where the deceased sold her property and gave her son the cash which he added to other funds, including a mortgage to purchase a property. She then moved in with him and his family, thereby reserving a benefit in the gift. She did not pay rent for her occupation. Does anyone think she can claim that in view of the fact that she did not occupy the entire property herself, that she has not reserved a benefit in the whole property? Can it be treated in the same way as a situation where a person gives a property away and continues to occupy it with the person it was given to? Surely in such a situation, the reservation of benefit will only be in half of the property?
In absolute terms, as she is now sadly deceased, she will not be claiming anything herself. Could you provide some information on how long ago her gift was made (assuming she held no title in the property), and what / who has initiated action to determine her interests.
Thanks Mark. It is the son who wishes to claim that there is no reservation of benefit, not the deceased! Thanks for pointing out my error there. Her son is her executor and I am acting for him. We are just trying to determine her interest. We would like to argue that her reservation of benefit was only in respect of part of the property and I was wondering if there are any arguments or any circumstances (other than the payment of rent) under which we could make that argument.
It may not be a GROB. The tracing rules do not apply to cash (see para 2, sch 20 FA 1986). It would be a GROB if D provided the cash to son on the condition that he bought the property for her to occupy (alone or with him and his family). Assuming the gift was not conditional, D had a POAT issue during her lifetime.
Thanks Stuart. This is an interesting perspective and certainly one that I will follow up and look into. I assume that going down the POAT lane would result in less tax being payable given that she had little income by then and the POAT may fall within her personal allowance resulting in no tax being payable. Would you or anyone else agree?
Her son is correct, there is no RoB. The Deceased sold a property. She then gifted the proceeds to her son. depending on how long she lived post the gift will determine any potential IHT liability. The Deceased did not transfer the house to her son and no RoB can apply. As a gift to another individual, it is either a PET or a immediate chargeable transfer.