Have been passed deed dated 2012. H&W xfd their home into trust. (worth under 650K) so CLT but no charge and CGT covered by PPR. H&W are ‘principal beneficiaries’ and are also listed in the definition of ‘beneficiaries’ along with children and remoter issue. Trust period is standard 125 years and power of appointment clause permits trustees to appoint income and/or capital to any of the beneficiaries at their discretion. In default of appointment trustees are to hold the fund for H&W in equal shares with H&W being life tenant of their respective share. Clause states that the income of the share shall be paid to the life tenant during their lifetime. Trustees may at any time during the trust period advance the share of capital to the life tenant. HOWEVER the deed then conflicts as it includes a settlor and spouse exclusion clause despite the earlier clauses which I have mentioned above!. (I can only think that was done for attempted care home protection). The admin provisions in deed give the trustees power to allow any beneficiary to enjoy or occupy the trust fund.
H has died within 7 years of creation, His will left his entire estate on death to W and solc has suggested that NRB is transferable to wife’s estate when she dies however as a GROB would have existed on H’s death I would expect that the value of his half share of the property at his death would have utilised a large % of his nil-rate band and so only the remaining % is transferable.
W is still alive and still occupying - her other assets ignoring the 50% share of home (GROB) will be subject to IHT as over nil-rate band. Looking at what can be done in order to secure the residence NRB – Will the settlor exclusion clause prevent the property being appointed to her despite the conflict with her being named as a beneficiary ? Solc is suggesting property is appointed to son and daughter who will then gift property to their mother (PET), Clearly there can be no obligation or pre arranged agreement that they must gift to their mother following the appointment. Is it possible to only appoint out and get into her estate the 50% she settled so that only half the value is in her death estate and would this avoid any IHT on the 50% H settled as although she is occupying he was the other settlor?
The other grey area is around PPR on appointment - Hoping trustees have a valid claim due to right to occupy by life tenant albeit the settlor exclusion clause says she cant benefit! Whether that clause means she is occupying via the trustees managerial powers I guess is question for debate but I would hope the intentions and earlier clauses are enough to satisfy the claim. Grateful for any thoughts