I have a terminally ill client coming to see me regarding potentially transferring a property to his son who is currently 17. I understand that the client isn’t expected to survive for more than a year.
Clearly as the son is 17, it will either be a case of creating a lifetime trust for him until he comes of age, or leaving it as a legacy under his Will, on the basis that he may well be 18 by the time he dies thereby avoiding the need for a trust at all.
What would the tax implications be of the above options if the son is still 17 at the date of death? I think that it would be better to leave the property as a gift under the Will rather than go to the expense of putting a trust in place now, but am I missing something?
Perhaps the client might consider making a declaration of trust in favour of the son, giving over the property absolutely and specifically excluding the provisions of s.31 Trustee Act 1925?
I believe this should result in the gift being a PET (query: if any gift with reservation might arise?)
A trust needn’t be expensive, it could be a simple bare trust / nominee arrangement for the son.
That said, the will options sounds better for tax - (1) avoid any CGT on the gift (2) RNRB is available on death but not for lifetime gifts (only relevant if the property has been the testator’s home at some point).
Osborne Clarke LLP
What is the value of the property that your client intends to transfer into trust?
I would be interested to discover whether it could be claimed that the son lived in the property and gave care to the father… and whether there would be any IHT relief for that…
I mean, it isn’t viable for a minor to own property but it is viable for them to be care givers…