Usufruct: IPDI?

I have been asked to advise on the IHT position on a Maltese Will. The Will was prepared in Malta and I have corresponded with the Probate Registry to establish if it can be submitted to probate in the UK.

The Will provides for 1/4 to the spouse absolutely and a usufrct by the surviving spouse over the other 3/4. The ultimate beneficiaries are the deceased’s children.

Is this an IPDI in favor of the surviving spouse and, hence spouse exempt?

Any guidance/comments would be greatly appreciated .

Martyn Dixon
Harold Bell & Co

Technically, you may need advice from a Maltese lawyer as to whether, under the Maltese code, a usufruct is a Napoleonic style property right of a self standing nature which extinguishes on death, or a lesser version which might be considered more a charge or burden over property.

It is not a life interest as such as, contrary to what HMRC and other headnote readers have suggested, the judgment in Pearson addressed a position of a settled life interest, implying a trust. The leading judgment’s last sentence is a mere summary in the context of a trust settlement and needs to be read in the context of the entire judgment.

If you need to discuss this over the telephone, please feel free to give me a ring on 01534 625879, I am back on Monday

Peter Harris