Joint ownership discount

Trusts Discussion
1

Spouse A dies. His estate includes a half share of his residence as tenant in common with his spouse-spouse B. No discount on his death.

Spouse B dies 4 months later. The estate of spouse A is still not administered and probate has not been obtained, although it has been applied for.

Spouse A’s Will leaves a NRB discretionary trust, residue life interest for Spouse B. The estate is worth about £1.5 m, 1/3 of which is the half share of the house.

Can there be a claim for joint ownership discount against the half share of the house in the free estate of Spouse B, and when calculating the value of the chose in action of the trustees of the life interest trust in the estate of spouse A?

If the half share of the house in the estate of spouse A had already been appropriated to the life interest trust, no discount would be allowed, as Spouse B would be treated as owning the whole property for IHT purposes. However, all that the life interest trust is entitled to is a chose in action at B’s death, but not any interest in a specific asset. The half share of the house is still vested in the executors. So it would appear reasonable to have the discount.

Simon Northcott

2

I don’t think you will get a discount in view of IHTA 1984 s 91.

Malcolm Gunn

M B Gunn & Co Ltd

3

Do the terms of the NRB DT set out the property that will constitute it? If not, then there is no certainty that the residuary life interest trust will receive the property and the surviving spouse has no rights over or entitlement to the half share of the property that was in their late spouse’s estate.

It appears to me a marriage discount should be available.

Stuart Maggs
Howes Percival LLP