I wonder if anyone can help me.
I have clients - mother and two daughters. Dad recently died and left the house in a lifetime trust for his wife and then to his daughters. As we are within two years of death the family want to appoint out of the trust to the mother. The mother then wants to give half her house to her daughters - a quarter each. One daughter lives with the mother and is intending to do so going forward, and as the mother’s estate is around £1.7m it makes doubly sense to give some of her estate away to try and make sure it remains under the £2m mark by way of carve out. Mother is not young but has a good chance of living a further 7 years. The other daughter does not live with her and the mother is not going to pay any rent to her and she also wants to retain a right to reside in any event. The gift to the second daughter is therefore caught as a pre-owned asset and I have explained this to them and that it will be included in the mother’s estate for IHT.
What I have been unable to find out is what the situation is as far as CGT is concerned for the daughter who does not live at the property. If the quarter share of the house given to her is included in her mother’s estate for IHT does she also have to pay CGT on it when sold with the base value taken as the value at Dad’s death or is the base value then considered to be the value at mother’s death as IHT was paid on it in the mother’s estate. If it is the former then they may decide to stick with the trust in Dad’s will as it created an IPDI trust.
Any assistance anyone can give would be greatly appreciated.