UNADMINISTERED NRB DISCRETIONARY TRUST AND CGT ON FAMILY HOME
H died in 2012 leaving Will incorporating the usual Nil Rate Band Discretionary Trust with residue to spouse.
His estate at death consisted of his half share of the matrimonial home owned with his surviving spouse worth £150,00 and £50,000 cash. The whole estate should therefore have fallen into the NRB Trust.
The family dealt with the Probate but evidently ignored the Will and no steps were taken to constitute the Trust. This seems to be a common occurrence. The surviving spouse received the cash and the
property remained in the names of the deceased and surviving spouse as tenants in common. The NRB legacy is currently unsatisfied but is still due.
The surviving spouse is now selling the property for £400,000 valuing the deceased’s half share at £200,000, an increase of £50,000. The NRB Trust is now to be constituted.
The following questions arise:-
Is the deceased’s half share of the property treated for CGT purposes as still being part of an unadministered estate?
If so, will CGT be payable on the gain by the PR’s on sale or, alternatively, if the half share is now appropriated to the Trust prior to any sale?
Would it assist if the Trustees appointed out the half share to the surviving spouse on a Life Interest prior to sale?
Since the surviving spouse has occupied the property throughout is this a situation where PPR can apply to the whole property, or will HMRC expect CGT to be payable on the unadministered half share of the property formerly belonging to the deceased.
Any comments would be welcome.