IHTM16131 - Rights of residence:
introduction
If someone has a right to reside in a property under the
terms of a trust, he or she will often have an interest in
possession in that property (
IHTM16132 +). This has a number of
effects for IHT:
- The death of the beneficiary occupying the property gives rise
to a claim to IHT under IHTA84/S4 with IHTA84/S49 (1). Where the
person becomes beneficially entitled to the interest in possession
on or after 22 March 2006, S49(1) will only apply if it is an
immediate post-death interest, a disabled person’s interest
or a transitional serial interest, S49(1A)
- If the beneficiary ceases to reside in the property in his or
her lifetime:
- a claim to IHT arises under IHTA84/S52 (1). Where the person
becomes beneficially entitled to the interest in possession on or
after 22 March 2006, S52(1) will only apply if it is an immediate
post-death interest, a disabled person’s interest or a
transitional serial interest, S52(2A); and
- the trusts governing the property after the beneficiary ceases
to live there will be either -
- in favour of an individual, a disabled
person’s interest (
IHTM42805) or a transitional serial
interest (
IHTM16061) - giving rise to a
potentially exempt transfer (
IHTM04057) by the beneficiary, or
- in favour of non-interest in possession or
non-qualifying interest in possession trusts (
IHTM16062) - giving rise to an
immediately chargeable (
IHTM04067) transfer by the beneficiary
as deemed transferor.
