Transferring GROB property to Discretionary Trust

Appreciate If forum members could assist me regarding below issue.

A widow (M) in her mid-60’s transferred her main residence (current MV £500K) to only daughter six years back and currently live in the same property. Since then, value has increased by £250K. M own two more BTL properties valued at £ 700K. Daughter(D) is married and lives separately.

To my understanding, the property will come under GROB rule. Now the daughter is considering transferring the property to a DT and allow mother to occupy the property rent free during mother’s lifetime. The beneficiaries of DT will be mother (prime beneficiary) and her minor children. D and her husband are considering to be trustees in the DT.

Will this be feasible as the property is already under GROB? Also, will there be any legal/tax issues that will arise due to this transfer other than usual taxes relevant to DT?
Are there any other suggestion including trust structures that are suitable, where daughter do not want to hold legal or beneficial ownership of the property and allow mother to live rent free?

Hasan Ghaffoor
Apex Estate Planners Ltd

I would say that notwithstanding the daughters action by transferring the property into a DT, the mother will still be stuck with having made a gift with reservation of benefit as she continues to benefit from the property she gifted. The daughter will however face a CGT Liability on the gain of £250,000 but presumably being put into a discretionary trust this can be held over. There will also be her own IHT liability on making a chargeable transfer worth £750,000. It doesn’t sound particularly attractive to me! I do of course stand to be corrected by others better qualified.

Patrick Moroney

Bwl solicitors

This post was flagged by the community and is temporarily hidden.

Unless you are using the Forum as a marketing tool, perhaps you could kindly set out your technical answers to her “problem”?

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Well said Peter. I thought this forum was not for advertising ones business but for joining in the discussion and asking for views or suggesting solutions to problems.

Patrick Moroney
BWL solicitors

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When I made a lengthy post refuting this contributor’s implication that an offshore trust was a universal panacea for a low key UK domestic tax issue my post was flagged and hidden as inappropriate.

Jack Harper

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Agree with Peter Harris

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I thought the same. In the past posts advertising one’s business were not permitted and were not published.

Cliona O’Tuama

Solicitor

I concur with Patrick’s comments. The reservation arising from mother’s gift of property to daughter seems not to have ceased even where the daughter settles the property on a DT assuming mother continues to occupy the property.

I’m not sure whose minor children are being referred to as beneficiaries under the DT; if they are children of the daughter (the settlor) then no CGT hold-over relief will be available on daughter settling the property on the DT.

Malcolm Finney

Hi
From an income tax point over view is M making a declaration on her personal tax return to pay the pre-owned asset tax or market rent. This should potentially get around the GROB charge. If this has not been done on her Return has she declared the gift on her Return 6 years ago?

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