Yes the short term usufruct would give the desired result, but you will need that checked by a Jersey advocate or solicitor. The usufruct or usufruit is alive and flourishing in Jersey despite mainland attempts to redefine it.
It will be essential from the legal and the IHT perspective to have the usufruct and the nue-propriété conveyed in front of the Royal Court, so as to be clearly evidenced as an immovable right in rem. I would suggest that the Jersey conveyance actually states that in the conveyance to forestall any move by HMRC Technical to countermand the obvious and attempt to shirk considering the classification rules applicable to what are here foreign immovable rights in rem by missapplying the second paragraph of s. 43(2) ITA 1984. If guidance is needed, please let me know as the correspondence with HMRC that I have had is navigable but only with the right sextant and compass.
There has been some reference in textbooks on Jersey law to a usufruct being in some manner an easement or a servitude. This is not a correct statement of the modern position as the reference made to those concepts is not to the modern ones, but to the old Roman law rights, which have developed over a millennium and half into fully fledged rights in rem, not personal ones, as in France.
No, the Usufruct is not an “interest in possession in settled property” and therefore “relevant property” as there is no settlement. There is no trust, either under Jersey law or under a correct classification procedure under English law and the state of affairs referred to and required in Barclays Wealth does not exist either in Jersey law.
The value of the usufruct by which the donor’s estate would be lessened would benefit from the spouse exemption, but it would obviously be far less that the value that HMRC would seek to apply to it under its favourite and totally unjustifiable fiction. Whilst the French valuation under article 669 CGI by way of comparison by reference to the age of the usufructuary is not directly applicable in Jersey, a Jersey advocate might seek to apply a valuation by reference to a similar principle.
The gift of the usufruct to the spouse and the nue-propriété to the Children would only come into charge if the donor did not survive 7 years, so the issues involved may only at the moment be hypothetical.
However, as there is no “settlement”, fictional or otherwise, there can be no initial, decennal year or exit charge either as there is no interest in possession in settled property and no “relevant property” created.
As the gifts will be carved “carved out” of the chose as legal, not equitable rights they will not fall to be mishandled as GROBs as if read correctly in the light of Ingram s.106 FA still does not apply to carving out or disposing of legal rights (or if you insist on the anglicism legal estates) in land in this case.
Please do not hesitate to contact me for further technical input.