I have a will which gives the deceased’s two adult children a right to remain in the property for 6 months and on expiration of this period (or otherwise before if they agree) the property then forms part of the residuary estate and is divided between the two children.
I cannot see I need to do anything about this trust, as it ends within 2 years of death - so no Deed of Variation or Deed of Appointment to close the trust. Does anyone have any alternative views before I get comfortable with that idea and fall into a trap? there is no dispute in the estate. It is agreed the house will be sold ASAP
Depending upon the precise wording of the will, the children could have an interest in possession in the house. Are they together the only residuary beneficiaries, or ae others also entitled to residue? If the later, PETs may arise upon expiry of the 6 month period.
If there is a risk of PETs occurring and a deed of variation is to be considered, the variation to remove the IIP would need to be made within the 6 month period, as HMRC’s view is that once an IIP has terminated its existence immediately after death cannot be excluded by a variation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
After 6 months there is no transfer of values for IHT as the children already hold IPDIs.
There is a CGT disposal by the trustees but TCGA 1992 s225 would presumably be available.
IHTA 1984 s144 is not in point.
Thank you. The beneficiaries of the IPDI are also the some résiduary beneficiaries. In which case it would seem I do not need to do anything.
Theoretically is that still a PET or because the IPDI bene and res bens are the same, is it construed that the trust doesn’t begin as they’re one and the same?
Something about it just feels a bit obscure and doing nothing about it does too but it does make sense to just let it run and end