Husband and Wife held a property as tenants in common (Form A restriction). Upon W’s death, some years ago, her beneficial half share of the residence was left to their 4 children in the will. No trust was mentioned or actioned.
However, no change of ownership was ever registered with HM land Registry and no Death of joint proprietor was ever declared (DJP). No further administration of the estate was done, and the husband continued to live in the property alone until his passing recently. He left his half share of the house, and residue of estate, to their children also.
Only H was executor of W’s will. 2 children are named executors of H’s will.
(Currently the property is still in the name of H and W with Form A restriction)
Given that their father has now passed and the children wish to sell the property, what would be best practice in regards to conveyance?
Firstly, I should say that I am not a conveyancer so happy to be corrected but my understanding is that on W’s death the legal title passed to H so only H’s exors will need to be involved in sale and they will receive the funds as trustees for themselves 50% and for the children 50%.
Aside from that there is a TRS issue as a Property Trust was created when W died as H was holding for himself and the children. Also, there is a CGT issue to consider as in the absence of any IIP trust in favour of the husband over the wife’s share the children have owned their half share she died and PPR will not apply unless they have lived there since.
You state “there is a TRS issue as a Property Trust was created when W died, as H was holding for himself and the children”
I was under the impression that a trust had not been created upon W’s death. Although they are mirror wills, with a tenants in common (Form A restriction) -possibly indicating a protective property trust was intended to be set up after Ws death- it was never actioned.
The language in W’s will does not indicate a ‘right to reside’ or explicitly mention a trust. Simply that her beneficial half share of said property is left to the children and residue of estate to H.
Do you suggest that a property trust was implicitly created, either by will language/ structure, or, by the omission of H to transfer the legal ownership of the property to the children upon W’s death? (H did obtain probate for W’s estate).
If so, should an IHT418 schedule indicating the trust have been included with IHT 400 as part of his estate? I don’t believe it was.
Does the fact that the wife passed in 2016 have any bearing on the TRS issue? i.e. date it needs to be declared
Excuse my ignorance on this, it is not my field and am seeking guidance as to where I stand before proceeding.
The property trust I was referring to is not one created under the wife’s will but merely by the fact that since her passing the husband has held the property as bare trustees on behalf of himself and the children.
No need for an IHT418 as he continued to occupy by reason of his joint ownership.
Strictly speaking it would be registrable as a trust with H holding as to 50% for himself and 50% for his late wife’s estate.
I agree that the trust is likely registrable although it is about to cease being registrable if the title is transferred to the children to hold for themselves.
-A trust arose in 2016 upon W passing by the fact that H did not transfer the title to the children.
-Strictly speaking the trust needs to be registered via TRS before the property is sold.
Regarding the CGT issue, I agree that the children will not qualify for PPR as they have not lived in the property.
However, it sounds as if the sale of the property will be treated as a sale by W’s estate for her half share. and thus no annual CGT allowance available to the children?
Therefore, ideally the title should be updated at HMLR before the sale in order to maximise CGT relief?