Definition of legatee for capital gains tax purposes
'Legatee' includes any person taking under a testamentary disposition or on an intestacy or partial intestacy, whether they take beneficially or as trustee. A donatio mortis causa (ie a gift made by the deceased in life that is to take effect on death) is treated for this purpose in the same manner as a testamentary disposition and not as a gift.1.
Property taken under a testamentary disposition or on an intestacy or partial intestacy includes any asset appropriated by the personal representatives in or towards satisfaction of a pecuniary legacy or any other interest or share in the property devolving under the disposition or intestacy. This is the case regardless of any consent between the personal representatives and the pecuniary legatee.2
Where settled property becomes distributable on the death of a life tenant, the remainderman is not regarded as taking the property as legatee, but as a beneficiary under a trust (see I5.241)3.
Where, however, the deceased's Will creates a life interest trust but the life tenant dies before the end of the period of administration, this means that the property never becomes settled property. The remainderman who then becomes absolutely entitled to the property is regarded as acquiring it as a legatee. A life interest trust is often created under a Will in favour of the deceased's spouse or civil partner so that they have a right to the income of the estate for the remainder