I have recently been instructed to prepare a Will for a client and in doing so she mentioned to me that in 2000 she used her own funds to purchase a rental property, which has been purchased in her daughter’s sole name. The rental income is paid to my client and she requires the rental income to maintain her current standard of living
Unfortunately, since the property was purchased, her daughter has had a stroke and, whilst now is severely physically disabled, appears to have mental capacity
I raised concerns with the client that if she gifted the cash to purchase the property in her daughter’s name, but reserved an interest in the property by receiving the rental income, then HMRC may regard this as a gift with reservation of benefit. I would be interested to see if other practitioners agree with me on this.
My question is what if anything she could now do to avoid this being the case. Clearly, it would require my client’s daughter’s instructions to transfer the property into anyone else’s name and ,of course, this could have its own inheritance tax implications on her estate.
Any thoughts would be greatly appreciated.
Harold Bell Infields & Co