IHT position following gift with reservation and declaration of trust

Trusts Discussion
1

  1. Father transfers property to his son, but remains living in the property and paying no rent. Gift with reservation of benefit.

  2. After a period of over 10 years, the son enters into a declaration of trust declaring that he holds the property for the father absolutely.

  3. The position remains the same until the death of the father following another period of 10 years or so.

Question is what effect the declaration of trust has from an IHT perspective. Is this still a GROB or can the father pass his beneficial interest in the property (set out in the dec of trust) by Will and therefore RNRB be available?

2

  1. F’s GROB is nullified by S’s later DOT returning the property to F’s actual estate

  2. F is thereafter free to leave it by Will for it to be “closely inherited” and attract RNRB.

Jack Harper