My client owns a property which was gifted to them by a family member around 20 years ago. Around 15 years ago there was a divorce and as part of the settlement a legal charge was added to the Title Deed stating that the “disposition of the sale” is in accordance with a declaration of trust in favour of their child. I’ve not seen any documents at the moment but have been told the agreement stated the child would be entitled to 30% of the property value on reaching 25 (in 2023).
My client needs to raise some funds and is looking to sell the property. I am wondering whether the 30% share is effectively held in Bare Trust for the child and therefore the share of the gain would be taxable on him.
I tend to agree with Paul’s comment. The options on divorce are many.
Where the main asset is the family home often on any sale no CGT charge arises due to relief under TCGA 1992 ss 222/223 (unless a sales occurs sometime in the future and part of the gain accrues to the spouse who vacated the property).
I’m not sure to what the child is entitled. (i) A 30% stake in the property (which may then be sold) or (ii) merely 30% of any sale proceeds post sale by one or both spouses?
(i) gives rise to a sale of a beneficlal interest in the family home whereas (ii) may be a disposal of a debt due.