I10.262 Interpreting 'free of duty' provisions
The interpretations in the decisions referred to below relate to estate duty, settlement estate duty, succession duty and legacy duty, but the same principles can be assumed to apply to IHT. Where it is stated below that an expression was held to confer, or not to confer, freedom from any particular duty, it may be assumed, unless otherwise indicated, that only that particular duty was in question.
Abatement. Annuities given 'without any deduction or abatement' were held to be free of legacy duty1.
Annuity. A direction to pay the duty on all annuities was held not to apply to a life interest in realty specifically devised2.
Benefits. A direction to pay 'all legacy, annuity, succession or other duties payable in respect of all and every the benefits given by this my Will' was held to except interests in residue3.
Bequests. 'All legacies and bequests' has been held not to include the proceeds of sale of real estate, but the decision turned on the word 'legacies. Bequests'4 was the key word in a number of cases dealing with duty payable on the death of a life tenant and with partial interests in residue.
Cash value. Where a father covenanted to make up each child's portion under a settlement to the 'cash value of £6,000', and the settled funds were sufficient before, but not after, the payment of estate duty on them, it was held that the duty must be borne by the portioners, not by the covenantors5.
Charge. A legacy 'free