I am dealing with an estate (deceased passed away June 2021) where the Wills were made in 2004. They contained a NRB DT which the three Executors and Trustees have decided to wind up.
There is also a gift of the deceased’s share in the family home to her husband for life and then to their daughter on his death. The deceased’s husband (also an Executor and Trustee) and the deceased’s daughter (another of the Executor and Trustees) wish to bring to an end the life interest trust over the family home (they have considered the implications of this) so that the husband will own the whole property absolutely. The other Executor is in agreement too.
As the daughter is the capital beneficiary and she is an adult who is able to consent, is it possible to prepare a deed of variation in relation to the life interest? The clause relating to the gift of the family home is very brief and there are very limited powers in the Will.
Rather than a deed of variation, the daughter might instead consider assigning her interest to her father.
Her interest under the will is an interest in remainder which is exempt for IHT, so that the gift will have no IHT consequences. It will also avoid HMRC raising questions as to whether there might be any consideration that could undermine the availability of s.142 IHTA.
If the daughter is required to survive her father any assignment would need to include as parties those who would benefit should she not survive her father, but that so too would a variation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Following on from Paul’s post, presumably with an assignment a TCGA 1992 s71 charge is in point (but as the death only occurred June 2021 presumably there is limited, if any, movement in the value of the family home). Presumably, no s76(2) charge arises.
Thank you Paul for your very helpful comments and suggestions. Also to Malcolm too and yes I believe there is very limited movement in the value of the family home .
Referring to Malcolm’s post, from a CGT standpoint, if the husband lives in the property, and did so before his wife’s death, then I believe any gain since the date of death would be exempt under s.225 TCGA 1992 (if the property interest has been appropriated to the trustees) or under s.225A TCGA 18992 if it remains in the hands of the executors when the daughter assigns her interest in remainder to the husband.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals