Q&As

If A gifts a property to their child but retains the right to live at the property, until such time as they ceased to live there, is this a potentially exempt transfer, subject to a gift with reservation of benefit or is it a lifetime trust subject to the relevant property regime?

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Produced in partnership with Oliver Hilton of Radcliffe Chambers
Published on LexisPSL on 31/10/2018

The following Private Client Q&A produced in partnership with Oliver Hilton of Radcliffe Chambers provides comprehensive and up to date legal information covering:

  • If A gifts a property to their child but retains the right to live at the property, until such time as they ceased to live there, is this a potentially exempt transfer, subject to a gift with reservation of benefit or is it a lifetime trust subject to the relevant property regime?

This would be a gift with reservation (RoB).

A disposal of property is caught by the RoB rules where it is made by way of gift and either:

  1. the possession and enjoyment of the property is not bona fide assumed by the donee at or before the beginning of the period of seven years ending on the donor’s death (or from the date of the gift to death if the gift is made within seven years of death) (the relevant period), or

  2. at any time in the relevant period the property is not enjoyed to the entire exclusion, or virtually the entire exclusion, of the donor and of any benefit to them by contract or otherwise

By the RoB rules, for IHT purposes either:

  1. the property is treated as being property to which the donor is beneficially entitled if it is subject to a reservation immediately before the donor’s death, and thus, the value will be brought into charge in th

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