I am dealing with an estate where the Will contained what appears to me to be a Right of Occupation. The interested party to the RoO (“A”) is not a spouse or relative in any way but is a co-owner of the property in question (with 68% belonging to deceased). The deceased’s two (adult) daughters (“B” and “C”) are both Trustees and ultimate beneficiaries to the deceased’s share of the property.
Key clause points are:
"a) I give free of tax to my trustees my beneficial share in the leasehold property known as X.
b) While “A” has a beneficial share in the property and wishes to occupy it (provided the property is kept in good repair and insured with insurers approved by my trustees under a policy in their names and hers at no cost to them and provided she pays all outgoings in respect of the property) my trustees shall take no steps to sell the property or to disturb or restrict her occupation of it or to require it to be shared with anyone else or to obtain any rents or profits from it but they shall join with her in selling it if she makes a written request to that effect.
c) subject to b) above my trustees shall hold my share upon trust absolutely for such of “B” and “C” as shall survive me and if more than one as tenants in common in equal shares."
Do people agree that this does constitute a full Right of Occupation, and therefore negates use of RNRB?
I would suggest that legal title to the property is now vested in A as surviving trustee of land, and her rights of occupation stem mainly if not entirely from ToLaTA 1996.
Whilst one can understand the testator’s intent, it is surely wishful thinking to include such terms as “sell the property” when the will trustees have no standing to do so.
In this situation, where the deceased, and now his trustees, have a beneficial interest in 68% of the property the trustees could insist on a sale on the basis that they have the majority interest. Having said that, if the surviving co-owner has an interest in possession under the will, to what extent might a court uplift their remaining 32% by reference thereto? On a 50/50 split ownership, I believe the surviving co-owner entitled to an IIP would have the majority interest, but not sure where they have less than 50%.
On the above basis, I can understand the reason for inclusion in the limitation in this instance, but feel the point raised by Mr Mullen applies to cases where ownership was 50/50.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thank you both.
I should have clarified in the original post that the deceased and A are Tenants in Common. This is why I was wondering whether this is actually a Right of Occupation in favour of A. If it is, then RNRB is not available to the estate and this increases an already existing IHT liability.
But it also seems that A is not being given a Right of Occupation in the deceased’s share, more that the gift of the 68% to B and C is an outright gift but with stipulations…