A Elderly Mother owns one quarter of the fam and house . She has a life interest in the remaining three quarters. The life interest was set up in her late husbands will and the remaindermen are her two daughters. A declaration of trust was set up in 1995 . Trustees are the mum and my client ( the farming daughter).
Mum lives in the farm house. Her farming daughter does not live there but farms the land. The other daughter lives in rented accommodation.
My client approached a lender sometime ago so that she could mortgage the property and invest in the farm. Obviously the lender would not lend to her because of the trust.
The mum is happy to gift her share / bring the life interest trust to an end . The non farming daughter would prefer to take cash for her share and the farming daughter would like the trust bringing to an end and to develop the farm.
Any advice as the best course of action would be appreciated. My first thoughts are that we have a qualifying IIP Trust. As such if mum gives away her interest then for inheritance tax it will be treated as a PET . It may qualify for APR (although the status of the farm will be judged at the time of mums death from the donees perspective) . Her continuing to live in the farm is a problem as it would be a gift with a reservation of benefit.
We also need to consider CGT on monies passing to the other daughter and whether holdover relief would be applicable.
Any thoughts or ideas would be appreciated
Collette Hodkinson
CPH Solicitors