A wife’s will gives the husband a life interest with overriding powers and then a discretionary trust Her estate includes a half share of the residential home held by them as tenants in common Because of the prior life interest s144 IHTA does not therefore apply
There is prior legacy trust with power to appoint the residential NRB interest to the son which would first be done to take up the relief, but the remaining half share of the matrimonial home would otherwise form part of the life interest which, under the Will started from date of death. Father would however be happy effectively to for that remaining half share to go to the son, as he can reside at the property under his half share To do so, it is proposed that the executors first appoint the son as the sole beneficiary absolutely, subject to the life interest and then that the trustees exercise their overriding power to terminate the life interest and appoint the remaining half share to the son absolutely In my view, that this then would be treated as PET by father but that it would not be treated as a GROB by him, as the son inherits under mother’s will, albeit that the transaction results in a PET by the Father That would then start the 7year period running. Any comments?
Michael Jepson
M J Consultants