Can a licence for a beneficiary to remain in a property be given by Will. I know that Trustees can grant a licence but wondered if this could be done by the Will to give the testator peace of mind. The testator does not want to give a life interest or right to occupy.
Tricia Longmore
Large & Gibson
A licence can be granted but if it gives exclusive possession it will probably be an IPDI
Simon Northcott
I have seen a number of wills that provide for the executors to grant named persons a tenancy. This is usually on commercial terms, or at a reduced rent, to persons already occupying under an existing tenancy.
Whilst it would also be possible to direct executors to grant a licence to occupy, there is a greater potential for HMRC to view this as a life interest, especially if drafted in such a way as to provide reassurance to the testator that the licensee will be able to have long-term occupation of the property.
Where property is given absolutely, with a wish that the beneficiaries allow the existing occupant to remain in the property for an unspecified period, my understanding is that HMRC do not view this as creating a life interest. However, the occupant will be a licensee of the beneficiaries and the testator would need to explain his/her thoughts to those beneficiaries and, hopefully, have their reassurance that they would be willing to comply with the testator’s wishes. Clearly, it would be for the drafting solicitors to be satisfied that such an arrangement would work.
Paul Saunders