I am drafting a very complex DOV to alter an IPDI to deceased’s girlfriend, in favour of the deceased’s children. The children and girlfriend have no trust between them at all.
Girlfriend has lived in the property since date of death, and will shortly be moving out. Usually, she could disclaim her interest in the property, creating a PET to the children under the terms of the Will. However, girlfriend requires so many stipulations to her giving up her interest in the home, that a disclaimer is not possible and we have to operate under a DOV where those stipulations can be noted to satisfy her.
My question is, I am drafting the DOV and naturally, where the property will now pass to the children (and not the girlfriend), they can claim the RNRB and TRNRB from their late father and late mother. However, they will be liable to CGT if the property sells for more than the probate value, which is likely.
Is there a way to have our cake and eat it? I can’t see how we can do the DOV and include s. 142(1) ITA 1984, and not s.62(6) TCGA 1992. Is it possible to split them and to say TCGA does not apply so that for IHT purposes we can claim the TRNRB and RNRB, but afford that for CGT purposes the property remains part of the IPDI until sold? I can’t see how this would work as if so, the CGT would be contrary to the terms of the DOV which would state the property passes to the children and no longer to the girlfriend, which presumably means the girlfriend can no longer claim principal private residence relief as a life tenant of the IPDI.
Another query, is SDLT. Some unquoted company shares are being redirected to the grandchildren. Should I be noting “IT is hereby certified that this instrument falls within category M in the Schedule to the Stamp Duty (Exempt Instruments) Regulations 19874” at the end of the DOV. From what I can see, this is only necessary if the variation is from a exempt beneficiary to a non-exempt beneficiary whereas in this case all beneficiaries are non-exempt.
I’d really appreciate someone’s comments on the above.
Many thanks