Husband (“H”) dies in 2017. Wife (“W”) predeceased in 2013. W made a gift of the nil rate sum to a Discretionary Trust (“DT”) in her will. Assets falling to DT included her share of property owned as TICs with H. Property was unregistered at the time. Value of her estate was less than £325k so entire estate fell into DT.
On H’s death, it transpires all of W’s assets had been treated as passed to H, including property. No formal documentation to appoint out to H. In 2015, H gifted property to his grandson (no GROB). HMLR entries show grandson as legal & beneficial owner.
H’s estate is potentially taxable when adding the value of his estate and the full value of the failed PET.
Query: How do we treat the management of the DT and the question of TNRB? Can we treat the assets as passing to H despite no Deed of Appointment having been executed? If so then H has made a PET of the entire value of the property which has failed. However with no Deed of Appointment am I correct in saying that S144 IHT does not take affect?
Or can we unscramble what has been done and treat 1/2 the property as actually trust property that has been appointed out to grandson rather than part of the PET? Grandson is a DT beneficiary.
Harrisons Solicitors LLP