A Will creates a Spouse Life Interest followed by a D.T. in remainder. The assets are 2 million.
1 For the purpose of the 10 year charge in future years does the D.T. start now or on the death of the Life Tenant.?
2. For the purpose of s 144 can an appointment be made now ( thereby appointing the remaindermen)
or can it be made on the Life Tenant’s death under s.144 ?
I wonder if practitioners can advise
Tony Bradshaw
Roach Pittis
- 10 year charges are calculated from the first death.
- s144 will not apply now as there is a life interest, and will not apply on the second death.
Simon Northcott
I agree with Simon Northcott- only I would add that the Trustees can make an appointment of the discretionary funds now, subject to the life interest, and sec 144 is not necessary as the reversionary interest is excluded property.
Tim Gibbons
To expand slightly on the answers given by Simon Northcott and Tim Gibbons:
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The 10-year charge will be based on the date of death of the testator but, of course, until the life tenant dies there will be no assets held in a relevant property trust. That changes on the death of the life tenant and first 10-year charge will occur on the next anniversary of the death. The charge will be reduced to reflect the time that the assets have been within the relevant property regime. -
It is not clear what Tony Bradshaw is seeking to achieve by the proposed deed of appointment as the end result will be the same: the value of the assets held in the life interest trust at the date of death of the life tenant will aggregate with the value of the free estate of the life tenant, and IHT calculated accordingly, whether the assets pass into the relevant property regime or direct to the remaindermen. This may be the CGT-free uplift in value if the remaindermen’s interests are already vested as at the death of the life tenant by virtue of the deed of appointment.
Graeme Lindop
Coles Miller Solicitors LLP