Disclaimer of LIT by other owner (TIC)

Hi all

I have an estate where my unmarried deceased left a LIT to her partner of their property, worth £225k. She was 94 and he is similarly aged and unlikely to stay there long.

They were not given advice on the IHT consequences of this gift and I have suggested a disclaimer. There is nothing stopping this on these facts as far as I can see. They both have valuable estates.

Can you please let know know if I’m missing anything obvious?

A disclaimer requires that the beneficiary has not accepted any benefit from the property; presumably, in the present case the beneficiary has presumably lived in the property and hence already had some benefit.

Malcolm Finney

Thank you for your reply.

This was my fear, but as the joint owner has a legal right to occupy anyway, could this not be argued against?

I think that as the survivor continues to live in the property in which he has an interest (giving a right to occupation) that this could constitute a strong argument that it did not follow that he had accepted the IPDI under the will and could therefore not disclaim.

It would still be important that he did not do anything else that might constitute acceptance.

Maybe someone has recent experience of HMRC’s attitude.

Malcolm Finney

I tend to agree with Malcolm’s revised view. The rights of a joint owner are very different to that of a sole owner. I think a co-owner’s right to disclaim an interest conferred on her by the other co-owner’s will should not prevent a disclaimer of that interest unless she has exercised any right of a sole owner. Strictly, the elapse of time should not of itself detract from that but in practical terms the longer it goes on the more difficult it will be to deflect the argument that the individual has exercised the rights of a sole owner. Who are the trustees of the IPDI trust? They should formally assert their rights to reinforce her argument.

The query does not make it clear whether the survivor was or was not a co-owner. If she was not and the IPDI is her only right to live in the property she cannot disclaim. “Their property” is ambiguous as we all tend to use “their” these days to as a singular alternative to his or hers as well as for the plural possessive.

Jack Harper

I must confess to a dislike of the apparent increase in use of the word “their” not least because, as Jack points out, it can be ambiguous. What was so bad in using “his” or “her” ?

Maybe this is the dinosaur coming out in me.

Malcolm Finney

I was going to clarify and apologise for the ambiguity a couple of messages ago, but then I re-read the title of the thread and thought it was pretty clear.

Thank you so much for your replies.

I am an analogue dinosaur and have a Ph.D in Pedantry. However I do try, despite myself, to avoid discouraging those who pose queries on here by nitpicking for the sake of it. The lawyer in me cannot help being a stickler for precision, often to the chagrin even of my family. So I apologise for any excess.

Last week in the supermarket I was sent off to procure “tomatoes and sweet corn in a tin”. I returned empty-handed to encounter disbelief and some fury. These items were in fact available and I would have been to find them if I had been asked to get “tomatoes and sweet corn in tins”.

As a student of Wittgenstein I learned early on that it is inaccurate to say “the ladies are wearing the same hat” instead of a similar hat. I once heard Lord Denning remark that there was a world of difference between “a woman and child” and a “woman with child”. I am afraid this psychopathology of mine is derived from a lifetime of drafting documents to avoid the minutest possibility of ambiguity (unless instructed to the contrary by the client, naturally!).

Jack

The life tenant could release the life interest by deed of release (there’s a precedent in Practical Wills). This would cancel the life interest and advance the remainder interest. Not great for the life tenant. If you’re within 2 years the life tenant should get IHT read-back under section 142. The remaindermen, who presumably aren’t occupying, won’t get PPR for CGT on their half.