The general rule is that for IHT an otherwise valid gift takes effect immediately (unless conditional or postponed in vesting to a specified date).
A gift can be void e.g. for illegality (never seen by me), uncertainty, or against public policy, and then of no effect from the outset. Some gifts are voidable e.g. for fraud, undue influence, mistake etc. A statute may be invoked to defeat a gift e.g. ss10 and 19 IFPA 1975, s37 MCA, s423 IA 1986.
A valid gift may be disclaimed if there has been no prior acceptance of it. It may well be the case that mere signature by a donee of a DOT in writing will constitute acceptance and at least furnish useful evidence of it. In my view the execution by a donee of a DOT under seal is acceptance. It is not all that usual to have a donee sign or execute a DOT so it betokens a deliberate action. But if one of several donees does not do so. unless it is a condition of the gift, it s probably neutral. A murky area is disclaimer by conduct. This is not only a severe evidential issue but can be legally effective (as HMRC accept in IHTM35162). Doing nothing is not conduct, one imagines, even to a judge. Unwise to assume it is.
The case law on whether a gift is perfect or not, and if not whether equity will perfect it, is extensive. A valid DOT complying with the 3 certainties, even if unilateral, is likely to be perfect and the knowledge of the beneficiaries is not required for validity. Unless you suspect, and certainly if you or the donees are on notice, that any of the vitiating factors mentioned above might apply to make it void, voidable, or statutorily vulnerable you and they must act as if it is valid for all purposes, so a PET if it qualifies as such.
If the fifth donee is notified (very good idea) of their entitlement, and asked to accept or disclaim, it might nonetheless be dangerous to regard non-cooperation as disclaimer by conduct, even if threatened and with a suggestion legal advice be taken. A trustee should inform an adult beneficiary of a present interest of his or risk breach of trust.Such notice will surely obviate a limitation extension claim based on fraud, concealment or mistake.
If acceptance follows, the date of the gift for all purposes inclding tax is the date the original DOT took effect. It will be so even if the legal estate only follows later.
The difficulty is that the intervening period can be fairly open-ended. This is not an unusual limbo situation. As Malcolm has written elsewhere online “There may be a number of reasons for an individual to effect a disclaimer. The beneficiary may simply not believe in inherited wealth; he may feel that his inheritance is too large or excessive; he may feel that there are other more deserving beneficiaries (e.g. charities); he may have fallen out with the testator and wants, as a point of principle, to not accept anything from him, etc.” Similarly for refusing to disclaim or even to engage. He might be mentally unwell or just one of life’s awkward squad, comme moi.
The Limitation Act is singularly unhelpful, prescribing long periods and none at all for equitable relief, subject to laches. This is an initial problem for the donor as trustee and then for the trustee-donees after they take possession or have the legal title transferred, which is entirely in order with a Form A restriction. Is the donor still living? How long and how are the four donees to protect the fifth share of the land/sale proceeds. Can they insure? As lay trustees will they just take a robust view and intend to rely on the Millwall defence (Let Them Come)? A professional would surely have to seek directions.
The PET requires no account to be submitted but if the donor dies within seven years his PRs will need to and so will come within ss239-242 IHTA.
Jack Harper