Where a settlor retains an interest in property which they have gifted or settled on trust, the property will be treated as part of the donor’s estate under the gift with reservation of benefit (GROB) rules (section 102 of the Finance Act 1986). For example, if an individual creates a discretionary trust and the beneficial class includes the settlor, the GROB rules will apply. If the settlor is not named in the beneficial class but there is power to add the settlor to the class of beneficiaries, it is considered that the GROB rules will again apply. This is often dealt with in practice by specifically excluding the settlor from

Lifetime gifts A lifetime gift of property will be a potentially exempt transfer under section 3A of the Inheritance Tax Act 1984. Inheritance tax is therefore potentially payable for seven years after the gift is made. See: Inheritance tax (IHT)—overview and Practice Note: IHT consequences of lifetime transfers. In order to make a lifetime gift there are a number of formal requirements: • the donor must have sufficient mental capacity • the subject matter of the gift must be certain • the donor must intend to make the gift.

For general information on the issues that need to be considered when dealing with the family home by Will, see Practice Note: Will drafting—the family home. A right of occupation may or may not give rise to an interest in possession for the survivor: it will depend on the particular facts and circumstances of the case. Interests which fall short of full life interests are still capable of being interests in possession for trust and tax law purposes. The inheritance tax (IHT) consequences for the testator and the surviving partner are likely to differ, depending on whether

Under Section 283(1)(a) of the Insolvency Act 1986 (IA 1986) the estate of a bankrupt is defined as all property belonging to the bankrupt at the commencement of the bankruptcy. Certain property such as tools of trade and things necessary for the bankrupt's basic domestic needs and those of their family are exempt from being part of the bankrupt's estate. Under IA 1986, s 306 all the assets forming the bankrupt's estate vest in the trustee on their appointment. For further reading, see Practice Note: What assets vest in the trustee in bankruptcy and what steps does the official receiver or trustee in bankruptcy

This Q&A considers the fees of £2,775 (official receiver’s administration fee) and £6,000 (official receiver’s general fee) payable in accordance with the Insolvency Proceedings (Fees) Order 2016 (IPFO 2016), SI 2016/692. Annulment There are three grounds upon which the court can make an order annulling a bankruptcy order: • if it appears to the court that, on any grounds existing when the bankruptcy order was made, the order ought not to have been made • if it appears to the court that, to the extent required by the rules, the bankruptcy debts and the expenses of the bankruptcy have all, since the making of the bankruptcy order, been either paid or secured to the satisfaction

We refer you to the following content which you may find useful for your purposes: • Practice Notes: ◦ IHT—valuation principles and particular types of property ◦ IHT consequences of lifetime transfers • Q&As: ◦ An individual made a gift of a share of a property within seven years of death. How should the gifted share be valued for the purposes of calculating the inheritance tax (IHT) liability arising as a consequence of the individual's death? ◦ The deceased solely owned the property in which they lived with their brother. In 2008, the deceased gifted half of the property for no consideration to their brother so that they owned the property

For information on deeds of variation, see Practice Note: Variation of Will or intestacy after death. In order for relief under section 142 of the Inheritance Tax Act 1984 (IHTA 1984) to be available, a number of formalities must be met: • the disposition must be varied by an instrument in writing. Although not required, this is often done by way of a deed known as a deed of variation

This Q&A assumes that: • this was a lifetime transfer into a discretionary trust which would qualify as a relevant property trust for the purposes of UK inheritance tax (IHT) • all trust assets are non-UK situs We refer you to Commentary: USA: Convention of 19 October 1978: Simon's Taxes [F4.161] at ‘Settlements’, which provides: ‘Where, at the time the settlement was made, the settlor was domiciled under the convention in the United States and was not a UK national, CTT/IHT is not imposed in the UK except on the situs

Section 39 of the Adoption Act 1976 (AA 1976) provides that an adopted child shall be treated in law, where the adopters are a married couple, as if they had been born as a child of the marriage (whether or not they were in fact born after the marriage was solemnised), and in any other case as if they had been born to the adopter in wedlock, but not as a child of any actual marriage of the adopter (AA 1976, s 39(1)). By AA 1976, s 39(2) an adopted child is also treated in law as not being the child of any other person. The section

The personal representative (PR) has the power to direct funeral arrangements and disposal of the deceased’s body. This Q&A has not stated who is the PR of the individual’s late spouse, but if it is (only) that individual, and that individual is the executor of their late spouse (rather than just administrator), and the individual’s executor accepts that appointment after the individual’s death, then the chain of representation under section 7(1)

A life interest trust is a trust which is established either inter vivos or by Will by which a person places on trust an asset or part of an asset but by the trust entitles the settlor to benefit from the use and income of the trust during their lifetime, with the capital assets being held for the benefit of the remaindermen, being those who receive the asset following the death of the settlor (or if the trust is by Will, the life interest tenant, often a surviving partner or spouse). In this scenario, it appears that the settlor wishes to settle into

Section 8A(5) of the Inheritance Tax Act 1984 (IHTA 1984) states: 'if (apart from this subsection) the amount of the increase in the nil-rate band maximum at the time of the survivor's death effected by this section would exceed the amount of that nil-rate band maximum, the amount of the increase is limited to the amount of that nil-rate band maximum.' Therefore, the maximum that can be transferred is one additional nil rate band. In order