X died in August 2014
X provided to their unmarried partner Y a right to occupy their property for life. This property then passes to X’s 3 children equally (1 of these children is also a child of Y).
Y passed away in August 2017 and their assets consist of £225,000 in cash plus the property that they had a right to occupy which is valued at £150,000.
Y’s estate passes to his only daughter, she is also the daughter of X.
Are we able to claim the Residence allowance on Y’s death and if so to what extent?
Brewer Harding and Rowe
I’m afraid not because on Y’s death the property was not closely inherited. If Yhad married X, so that X’s children were Y’s step-children, it should apply but as they were unmarried, there is no relevant connection.
(this assumes that Y did not adopt/foster/become a court appointed guardian of X’s children).
Osborne Clarke LLP
As one of X’s children is also a child of Y, I would have thought the residence nil rate band would be available in the trust fund, but limited to a one-third share of the property in which Y had the right of occupation. Unless I have missed something, I have seen nothing to suggest that non-marital children are no excluded from the relief. Any claim for the RNRB may be subject to satisfactory evidence that the child is a daughter of Y (is he named on the birth certificate?).
Apologies, I had missed “1 of these children is also a child of Y” (with thanks to Malcolm Finney for pointing it out).
I think the RNRB would be available but limited to one third of the property (£50,000) as only one of the three beneficiaries who inherited the property is a descendant so only one third was closely inherited.
This is on the basis that Y’s estate included the property under s.5 and s.49 and therefore the relief applies under s.8E(1)(a).
One of the 3 children of X, who now benefit from the property, is also a child of Y. I think we are able to claim a 1/3 value of the property, do forum members agree?
Brewer Harding and Rowe
It is my understanding that as the deceased had an IPDI in a trust fund holding the house, if on their death the trust fund passes absolutely to a step child, the RNRB would be available to the deceased’s estate capped at the value of the 1/3rd share that is closely inherited by the step child, as long as there are no overriding powers of appointment in the trust that prevent the step child taking beneficially.