Husband & Wife owned their house as tenants in common in equal shares. Wife died leaving her husband a life interest in her half of the house. After husband’s death the Will Trust provides for the half share to pass to Mr L absolutely. Wife’s Will leaves the rest of her estate to her husband. Mr L now wants to give up his remainder interest for no consideration. It is over 2 years since wife died. Both husband and Mr. L want to achieve the result whereby husband becomes the sole owner of the house without the life interest. A deed of variation signed by husband and Mr. L including a substituted Will simply leaving the whole estate to husband was being considered. What would be the IHT and CGT consequences of this? Is there a better way to deal with this matter?
Assuming the trust has always been UK resident: The assignment itself should be free of tax (excluded property for IHT, no chargeable gain for CGT - s.76 TCGA).
There would be a deemed disposal of the trust fund by the trustees under s.71 as the beneficiary is becoming absolutely entitled but presumably they could claim PPR there.
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Thank you Andrew
Regards,