Right to Occupy under Will


#1

I wonder if anyone can help with the following:

The deceased has left his house to his trustees giving a right of occupation/to income for life or earlier remarriage to his partner (not spouse or civil partner) remainder to the adult children. Otherwise under the Will there is a legacy of cash to the partner from which IHT on the whole estate is to be paid. The IHT and assets are such that it requires this legacy plus the entire residue (due to adult children) to pay the IHT and this still leaves instalments that will need to be paid over the next ten years in relation to the property held in the trust.

The trustees would like to sell the house now, pay all the IHT and buy the partner a new house but the partner wants to stay put.

I am looking for clarification as to whether the executors are able to sell the house to pay all the IHT and transfer the balance to the trustees - the trust being established from that point or whether there is a trust of land established from the date of death with a beneficiary in occupation.

The duty to consult is excluded by the STEP provision but my understanding is that the right to occupy s.12 and 13 TLATA 1996 are not.

Any suggestions/advise gratefully received, as you will have gathered there is no cash after IHT.

Justine Alford
Burningham & Brown Solicitors


(Paul Saunders) #2

Can the trust be constituted before the executors are able to transfer the property to the trustees?

On the basis that the trust devise abates in order to satisfy the outstanding inheritance tax and any administration expenses, unless the trustees are able to discharge those liabilities, and the executors be released from liability, the executors would be ill-advised to constitute the trust by transferring the property to the trustees.

It seems to me that the executors may well need to sell the property to enable the estate to be administered, and the trust constituted. If they exercise the power of sale, I believe that this will not be subject to the duty to consult under TLATA 1996.

If the partner is unwilling to cooperate, it should be relatively straightforward to obtain an order for possession, although you would need to consider obtaining a Beddoes order, or an indemnity on the costs from the remaindermen.

I suggest the next step might be to consult Chancery counsel. Sharing their opinion with the beneficiaries, including the partner, might enable matters to move forward with a reduced risk of confrontation/litigation.

Paul Saunders