I have been contacted by our Conveyancing Department who have flagged up an issue relating to something done by one of my predecessors.
A declaration of trust was prepared in 2005 which effectively gifted a property from mother to sole son subject to a Life Interest. Mum continued living in the house. The leasehold title of the property was transferred to the son. No mention of the declaration of trust is recorded on the leasehold title.
The current issue is that the freehold title appears to have been neglected and is still in the mother’s name. She died in 2013. The son has accepted an offer to sell the property recently (we shall ignore the potential CGT issues at this stage).
We will have to apply for a grant in mum’s estate - which the son did not believe necessary as the property was already in his name and it was not required for the rest of the estate.
The question is, was this a Gift with Reservation (which will require an IHT400) or a gift into a trust (IHT205)? I have a feeling the answer is the former, but as the property is only being sold for £110k and due to the initial error we cannot charge the client, I am hoping that it is the latter.