Assent of Equitable Interest – part of property only

Tom99

[FONT=Tahoma, sans-serif]I am administrator of my father's estate, have obtained probate and will be selling my fathers house.

[/FONT] [FONT=Tahoma, sans-serif]There are seven beneficiaries each of whom have a percentage interest and there will be a final inheritance tax bill due after the sale of the house.

[/FONT] [FONT=Tahoma, sans-serif]Because it has taken some time to obtain probate and market the house, values has risen. As a result Capital Gains Tax will be paid by the estate.

[/FONT] [FONT=Tahoma, sans-serif]This tax can be reduced by transferring the property to the beneficiaries before contracts are exchanges on the sale. Each beneficiary will then be able to use their £11,300 annual allowance. However enough would need to be left in the estate to cover the inheritance tax bill.

[/FONT] [FONT=Tahoma, sans-serif]I would like to use an Assent of Equitable Interest to transfer 75% of the beneficial interest (note not the legal interest) to the beneficiaries leaving a 25% share in the estate to pay inheritance tax. The assent would not need to be registered with the Land Registry since the legal title remains with the estate.

[/FONT] [FONT=Tahoma, sans-serif]Is it possible to assent only part of the property in this way?

[/FONT] [FONT=Tahoma, sans-serif]Thank you[/FONT]

Yorkshireman99

Tom99 wrote: »

[FONT=Tahoma, sans-serif]I am administrator of my father's estate, have obtained probate and will be selling my fathers house.

[/FONT] [FONT=Tahoma, sans-serif]There are seven beneficiaries each of whom have a percentage interest and there will be a final inheritance tax bill due after the sale of the house.

[/FONT] [FONT=Tahoma, sans-serif]Because it has taken some time to obtain probate and market the house, values has risen. As a result Capital Gains Tax will be paid by the estate.

[/FONT] [FONT=Tahoma, sans-serif]This tax can be reduced by transferring the property to the beneficiaries before contracts are exchanges on the sale. Each beneficiary will then be able to use their £11,300 annual allowance. However enough would need to be left in the estate to cover the inheritance tax bill.

[/FONT] [FONT=Tahoma, sans-serif]I would like to use an Assent of Equitable Interest to transfer 75% of the beneficial interest (note not the legal interest) to the beneficiaries leaving a 25% share in the estate to pay inheritance tax. The assent would not need to be registered with the Land Registry since the legal title remains with the estate.

[/FONT] [FONT=Tahoma, sans-serif]Is it possible to assent only part of the property in this way?

[/FONT] [FONT=Tahoma, sans-serif]Thank you[/FONT]

You really need paid for specialist legal advice as to how you can do this, even if you can do it at all. It is emphatically not something you can DIY.

Tom99

[FONT=Tahoma, sans-serif]Don't worry there is no chance of me DIYing this, I will be employing a solicitor. I just thought I would ask if anyone else has come across the same problem.[/FONT]

MichelleUK

Yes, it is possible but will the CGT tax on the 25% share be fully covered by the estates single CGT allowance?

If not, it may be better to give 100% ownership to the beneficiaries but add a clause to the document that states that the beneficiaries agree that £x will be deducted from their proceeds to cover the outstanding inheritance tax.

Tom99

[FONT=Tahoma, sans-serif]Yes the single CGT allowance for the estate will cover the gain on the 25%[/FONT]

Tom99

[FONT=Tahoma, sans-serif]MichelleUK - Thank you, do you have pointers to any legal website which confirm the question?[/FONT]
[FONT=Tahoma, sans-serif]My own solicitors want to spend five hours research taking three weeks at £235+VAT per hour to give me an answer.[/FONT]
[FONT=Tahoma, sans-serif]I can't believe I am the only person in the UK who has more than one beneficiary and an increase in value between probate and sale. It must surely be quite a common occurrence?[/FONT]

Yorkshireman99

Tom99 wrote: »

[FONT=Tahoma, sans-serif]MichelleUK - Thank you, do you have pointers to any legal website which confirm the question?[/FONT]
[FONT=Tahoma, sans-serif]My own solicitors want to spend five hours research taking three weeks at £235+VAT per hour to give me an answer.[/FONT]
[FONT=Tahoma, sans-serif]I can't believe I am the only person in the UK who has more than one beneficiary and an increase in value between probate and sale. It must surely be quite a common occurrence?[/FONT]

Try asking another solicitor who is a STEP member for a quote.

getmore4less

Just ask HMRC or use an accountant(this is outside the scope of solicitor)

This is a tax question to do with beneficial interests of a property held in a trust.

If HMRC will allow the beneficial interest to be counted as belonging to the beneficiaries there will probably* be nothing to do other than a load of tax returns.


it may depend on the exact wording of the will, if that is not sufficient then additional documentary evidence of the beneficial ownership transferring may be needed to satisfy HMRC for the purposes of CGT.

those more knowledgeable about this hang out on the tax board.

http://forums.moneysavingexpert.com/forumdisplay.php?f=22


if you want to do some additional research to help understand what you are dealing with there is relevant information in this HMRC guide and loads of links to more information.
https://www.gov.uk/government/publications/trusts-and-capital-gains-tax-hs294-self-assessment-helpsheet/hs294-trusts-and-capital-gains-tax-2015

Yorkshireman99

It is empahticly not a job to DIY. A good solicitor would refer the OP to a specialist solicitor or accountant.

getmore4less

Tom99 wrote: »

[FONT=Tahoma, sans-serif]MichelleUK - Thank you, do you have pointers to any legal website which confirm the question?[/FONT]
[FONT=Tahoma, sans-serif]My own solicitors want to spend five hours research taking three weeks at £235+VAT per hour to give me an answer.[/FONT]
[FONT=Tahoma, sans-serif]I can't believe I am the only person in the UK who has more than one beneficiary and an increase in value between probate and sale. It must surely be quite a common occurrence?[/FONT]

The HMRC manual will get you up to speed to know if your chosen expert(s) have a clue.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg30200c

Tom99

[FONT=Tahoma, sans-serif]Thank you for all your replies.

[/FONT] [FONT=Tahoma, sans-serif]I will not be DIYing and am using a STEP solicitor.

[/FONT] [FONT=Tahoma, sans-serif]I understand the CGT side, effectively there will be eight tax returns, one for each beneficiary and one for the estate.

[/FONT] [FONT=Tahoma, sans-serif]It is the legal side which requires research, can I assent 80% to the beneficiaries leaving 20% in the estate. The STEP solicitor initially said the research would take “a maximum of 2 hours” however this has now changed to “it could take 5 hours and I will have an answer in 3 weeks”. This would be in addition to the cost of drawing up the assent itself.

[/FONT] [FONT=Tahoma, sans-serif]Taking into account the possible saving in CGT and the extra cost and hassle we have decided to take the easiest option of selling the property in the estate and paying the CGT.

[/FONT] [FONT=Tahoma, sans-serif]Once again thank you for your comments and links.[/FONT]