Interest in possession over share in property

Trusts Discussion
1

I am dealing with the administration of an estate where the deceased (A) had a 1/3 share as a tenant in common over a residential property. A lived in the property until death. The estate is taxable.

The property originally belonged solely to B. B left a will, the will was drafted when B was the sole legal and beneficial owner. In the will B stated that no sale of the property could be made during the lifetime of A and C and they could occupy until their death. Subject to that the will stated that ‘my dwelling house known as…’ would be left to D and E.

Before B died (1993) the property was gifted as TinC in equal shares between A B and C. The gift was after the will.

A and C lived in the property until their deaths. A is the last to die.

Does the gift in B’s will relating to the right to occupy and the gift of the property still apply. So that B’s 1/3 passed to D and E subject to the right of occupation in favour of A and C.

Was an interest in possession created over B’s 1/3 share so that A’s estate includes the value of A’s own 1/3 share and the value of B’s 1/3 share.

2

The question seems to be whether the gift of “my dwelling-house” in a Will made when the Will maker B owned the entire property is apt to leave the 1/3 share that was retained after subsequently giving away 2/3 of it. As long as B resided in the property at death I would incline to the view that the gift is effective to vest the 1/3 share in D and E. I don’t think the whole gift was adeemed. That might be so if B had referred to “my residence” rather than “my dwelling house” and had moved out by the date of death. The actual wording could matter.

The purported restrictions on sale in B’s Will seem to give A and C a joint QIIP (IPDI) in that share. I say that without sight of the actual wording.

So I agree: A at death owned 1/3 outright and an IPDI in B’s former share of 1/3 and not 1/6 as C had predeceased A. For valuation discount purposes on A’s death 10% would apply rather than 15% as no one was then residing other than A.

Jack Harper