We act in a family dispute. Mother and two adult children are co-owners of a property held on trust of land, with equal beneficial shares. Mother wishes to give her one-third beneficial share outright to one of the children. Because she is in dispute with the other child, she does not want notice of the disposition served on the trustees under s.137 LPA 1925. My provisional view is that, provided there is an otherwise valid disposition/assignment of her equitable share, the absence of s.137 notice does not affect the validity of the disposition. If so, the gift should still amount to a transfer of value capable of being a PET for IHT purposes, although lack of notice may create evidential issues (assume there is no reservation of benefit by the mother after the gift).
I have 2 questions:
Has anyone considered whether HMRC would require notice to the trustees before accepting that the PET period has started?.
I propose using a Deed of Assignment of an Equitable Interest in land precedent. If anyone has a contrary view, I would appreciate your help.
Notice is not required for validity of an assignment of an equitable interest in land, only writing and a deed is prudent if gratuitous. The assignee runs the risk that the assignor’s share of any sale proceeds will be paid to the assignor.
You do not mention how the legal title is held, or how the equitable interests were created, and whether the change in them affects the TRS registration position (as the assignor will cease to be an equitable owner but may remain a trustee).
Many thanks Jack, your summary confirms what I thought and hoped was the case.
The legal title is held as TinC with equitable interests established at the time of transfer. No requirement to register the trust up to this point, but good point that it will need registering once the trustees and beneficiaries are not aligned. Thanks again Jack, you have really helped me.