Hi,
I met with a new client today who is divorced with two sons. One son lives with her (full time) and qualifies as a disabled person for tax purposes. Client is only entitled to one NRB and one RNRB but has assets in excess of £1,000,000.
Client wants to reduce her estate for IHT purposes but also wants to ensure that her disabled son is protected and ultimately (after her death) ends up with the benefit of the primary residence which is worth approximately £800,000 with no mortgage. She has four other BTL properties but they all have mortgages on them.
It was suggested in the meeting that a transfer was made of 50% of the residential property into a DPT now, in an effort to remove a large chunk out of her estate for IHT purposes, and then on her death, have the remaining beneficial interest in the residential property pass into the DPT.
I have two questions:
- Will this count as a GROB given that the disabled son, who lives with her full time, is not absolutely receiving the gift but is instead only receiving the benefit under the DPT; and
- For CGT purposes, will PPR still apply to this transfer given that it’s going into the trust and, again, not to the son who is residing in the property.
Thank you.
Kristen Woods
Eric Robinson Solicitors