Right to occupy

[tricia.longmore]

I am in the process of drafting a Will where the T wants to leave her partner the right to live in her property for the rest of his life.

I have drafted a right to occupy with an overriding right for the trustees to revoke the power using Express Wills. In the commentary it uses these words “There is a statement declaring that the right of occupation can be terminated by your Trustees, at their discretion at any time. This has a relevance for Inheritance Tax planning.”

I am trying to find out what this significance is but not having an easy time of it!

It is my understanding that it does not matter how the right to occupy comes to an end, it will be treated as part of the Occupier’s estate on death or a GROB (still lives there) or PET (leaves the property) if the right ends during his lifetime. Or does the fact that the right is revocable not give him an IPDI?

Tricia Longmore
Large & Gibson

[andrew.goodman]

Your understanding is correct (it would be a chargeable transfer if the revocation caused the property to pass onto other trusts but I guess here it would pass to a reversionary beneficiary outright).

I cannot think what the significance of the statement is. The old route to avoid a GROB has long gone. Perhaps it is just a misleading way of stating that exercising the right will have IHT consequences for the occupier.

Andrew Goodman
Osborne Clarke LLP

[tricia.longmore]

Is it that if Occupant ends right it is a PET but if trustees end right it is not a PET by the Occupant?

Tricia Longmore
Large & Gibson