Sale of Settled Land Act land after death of life tenant

Trusts Discussion
1

Hi
I am involved with the sale of two plots of land which were both settled by the same Will in 1937. They are being sold by the PRs of deceased life tenants with the consent of the SLA trustees. The
Will provides that after the death of the life tenants the two plots are sold and the proceeds divided between the grandchildren of the Testator who survived him and attained the age of 21. I have traced all the beneficiaries.
My question is can the PRS of the deceased life tenants (again with the consent of the SLA trustees) appropriate part of the equitable interest (not all as that will be required by the PRs to pay for costs etc) to the beneficiaries so that they can utilise their CGT allowances to set against the significant gain that the PRs will otherwise realise. Or is that unnecessary if the PRs (and the SLA trustees) are effectively hold as bare trustees for the beneficiaries already? I think the latter unlikely as the SLA trustees consent has to be given.
All and any thoughts would be welcome.

2

If, as implied in the question, the land is no longer settled land, then following the death of the last tenant for life their personal representatives effectively hold the legal title as nominee only for the Settled Land Act trustees. All the powers of sale, etc., are vested in the Settled Land Act trustees.

In view of the above the personal representatives should act as directed by the Settled Land Act trustees. Depending upon the amount of work that would be involved in dealing with the plots of land, it may be preferable to consider vesting the legal title in the Settled Land Act trustees, thus absolving the PRs of the deceased tenant for life from responsibility.

With regard the CGT position, as the trust has come to an end, for CGT purposes any transaction with the land will be deemed to be made as bare trustee for the beneficiaries now entitled.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Many thanks Paul, your advice is much appreciated.

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4

This matter has now moved on, the land has been sold and the PRs of the two life tenants are holding the proceeds of sale. I have two questions:-

  1. Presumably I register the SLA trust and not worry about the two life tenants’ estates as the PRs of those estates were holding as nominees for the SLA trusts?
  2. Paul mentioned that “as the trust has come to an end any transaction with the land will be deemed to be made as bare trustee for the beneficiaries now entitled”. I assume therefore that the liability for the CGT rests on the shoulders of the ultimate beneficiaries and not on the shoulders of the PRs of the estates of the grandchildren (who were the remaindermen in the will)? I guess this is about to whom the SLA Trustees have a duty to account to now they are holding as bare trustees. Is it the estates of the remaindermen or should they dig down and ascertain who is now entitled to those estates - i.e. the ultimate beneficiaries?
    Sorry to raise this again but the CGT will be significant and of course the PRs of the estates of the grandchildren will not have the benefit of the personal allowance whilst the ultimate beneficiaries will. Any thoughts will be appreciated.