I am advising the trustees of a flexible life interest trust created by a Deed of Variation in 2005, which will convert to a relevant property discretionary trust on the life tenant’s death. The only asset in the trust is farmland, which qualifies for 100% APR.
The trustees are currently considering whether to:
a) Appoint all of the assets to the life tenant now, during her lifetime, who will then leave them to her daughter in her Will; or
b) Wait until the life tenants’ death, then as soon as possible afterwards appoint all of the assets to her daughter.
I appreciate that there are a number of other reasons why it would be a good idea for the trust to be left in place, but I am currently specifically considering the APR consequences of the above actions and I am struggling to determine the following:
For example a) above - Whether the life tenant would need to survive for 7 years, for her estate to qualify for APR if the assets were appointed to her now, or whether this is not necessary in view of the fact that she already has a QIIP.
For example b) above - Whether the trustees would need to keep the farmland for 7 years following the death of the life tenant to qualify for APR before it can be appointed to life tenant’s daughter, following her death. If they would need to keep it for 7 years, the trustees are considering whether to appoint the reversionary interest to the daughter now, if this would not have any IHT or CGT consequences.
Does anyone know the answers to these questions or where the relevant authority can be found?