One of the parties to a Mutual Will passed. The survivor (the non-parent to the beneficiaries of the property named in the wills) has been told by a lawyer acting for the beneficiaries that she must pay the tax on the estate of the deceased as the property she received under the joint tenancy vest in her.
My question is, given her will is mutual - the property is vested in the deceased’s personal representation/the estate and not vested in her as a joint tenant because the property is subject to a mutual will. Surly, my client is just holding the property on trust for the beneficiaries? So, who pays the IHT?
Presumably the joint property vests in her as surviving joint tenant rather than the PRs? I don’t see how the mutual will changes that.
I wouldn’t consider the obligations created by mutual wills as a settlement/trust. I have always thought of it as a contractual obligation which can create a constructive trust over the assets (by way of a remedy) if the survivor breaches their obligations.
Even if it were a settlement, the property would be vested in the survivor as a trustee and she would be liable to the IHT on that property in her capacity as trustee. (if you followed that analysis through to a conclusion, the survivor would be a life tenant as well).
If the property is owned jointly it passes to her by survivorship, not under the Will. If they were not married she is liable for IHT on whatever passes to her on his death. If it is actually a mutual will, not just a mirror will, it passes eventually to her beneficiaires and is potentially taxable.