Is a TR1 needed to make a PET

Trusts Discussion
1

Good evening,

My query concerns a holiday home which is in joint names of husband, wife and two adult daughters- Tenants in common.

Husband and wife are elderly and unable to use the holiday home, yet the value of a half share sits in their estates - a quarter each.

Husband has lost mental capacity. A financial LPA appoints the two daughters.
Wife has capacity and wants to transfer her interest to her daughters for IHT planning reasons.

Is it sufficient to deal with the transfer of wife’s interest via a Declaration of Trust - just in relation to her quarter share - or is it necessary for wife and daughters to sign a TR1?

We are looking at the possibility of applying to the Court of Protection so that a gift of father’s quarter share to daughters can also be made. As this is a substantial gift, it could not be one made by the attorneys under the LPA.

Many thanks in advance.
Deborah

2

The TR1 is not essential. A Deed of Assignment of wife’s beneficial share should do the trick. Querty the GT considerations, and the potential to obtain CGT uplift on death. An issue with the DoA/DoT route is that you then have to register the Trust, which would not be needed if a TR1 were used.

I agree a COP application would be necessary.

3

A DOT in writing under hand to transfer the equitable interest will be effective: s53(1) LPA 1925. A TR1 can only be executed by those on the register and in accordance with the Form A restriction, which is presumably entered. No SDLT but in my experience HMLR do not give much priority to registering voluntary dispositions.

The effect of the DOT will be a disposal for CGT at market value less discount and a GROB for IHT if W continues to use the holiday home.

Jack Harper