Commentary

I9.321C Settled securities with no interest in possession

IHT, trusts and estates

I9.321C Settled securities with no interest in possession

I9.321C Settled securities with no interest in possession

Settled exempt government securities not subject to a qualifying interest in possession1 will only be excluded property if the trustees can demonstrate2 that all known persons for whose benefit the settled property, or income from it, has been or might be applied, or who are or might become beneficially entitled to an interest in possession in it, are persons who satisfied or satisfy the exemption conditions for the beneficial owner of the securities3. The conditions for exemption are, for most exempt stock, that the relevant persons should be resident (before 6 April 2013, ordinarily resident)4 outside the UK (and, where applicable not domiciled).

The requirement here is a stringent one and the following points should be noted:

  1.  

    (a)     The condition has to be fulfilled in relation to all the property comprised in the same settlement, not just the exempt government securities5, even if the settled property has been provided by two or more settlors6. It seems that this includes property formerly comprised in the settlement which has ceased to be so comprised as a result of an application of capital, but it would be possible to argue that 'the settled property' in IHTA 1984, s 48(4)(b) means only the settled property currently comprised in the settlement, with the result that the domicile and residence of beneficiaries who have had applications of capital made in their favour can be ignored where those beneficiaries have since been excluded from benefit and all the capital applied

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