Right of occupation and RNRB?

Trusts Discussion
1

The Will has left a right of occupation for deceased’s son for a 12 month period. Thereafter, the property is to be divided between two children (the son that has the right of occupation and the other son). My understanding is that the RNRB would be available because it is classed as inherited for the purposes of section 8J Inheritance Tax Act 1984. In addition to this, as the right of occupation is for the benefit of the son, this satisfies the criteria of being closely inherited.

I just want to check whether this appears to be correct?

Thank you.

Sherelle

2

Hello,

Id agree with your analysis. IHTA 1984 states there must be a dispostion to a close relative.

The legislation doesnt prevent the lineal decendents occupying the property on death IMO.

Richard C. Bishop
PEP

1 Like
3

Generally, an interest in possession will arise in such circumstances in which case as an IPDI in favour of a lineal descendant a RNRB will be available.

HMRC comment: " IHTM16131 - Rights of residence: introduction
If someone has a right to reside in a property under the terms of a trust, he or she will often have an interest in possession in that property. This has a number of effects for Inheritance Tax (IHT)".

Malcolm Finney

1 Like
4

Thank you both! It is much appreciated.