Private client section

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Issue 27 – April 2008

Contents

Cases
Statutory instruments

Features

Articles
News

Events

Offers (how to claim book discounts)

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Cases

1. Baker v Baker and others

Cite: [2008] All ER (D) 312 (Mar)
Court: Chancery Division
Judges: Paul Chaisty QC sitting as deputy judge of the High Court
Hearing date: 20 March 2008
Representation: Anthony Allston (instructed by Sheratte Caleb) for the claimant; Edward Rowntree for the first and second defendants. Richard Buswell for the third to sixth defendants
Summary: family provision – widower – reasonable financial provision – whether deceased making reasonable financial provision for widow in will – whether lump sum appropriate – Inheritance (Provision for Family and Dependants) Act 1975, sections 2, 3

The claimant, aged 57, and the deceased were married in August 1986 and had four sons together, albeit both had children from previous relationships. At the time of the deceased's death and for many years previously, the deceased had, as sole proprietor, operated a scrap metal and vehicle recovery business. He died in November 2001, aged 61. He had made a will (see paragraph [4], below), by which, inter alia, he gave all his interest in the matrimonial home to his trustees upon trust to sell the property, albeit that the claimant would be permitted reside in the property and the proceeds of the sale of the property to be held on trust for the claimant and her sons. The assets of his estate comprised the former matrimonial home, the business and business premises. The matrimonial home had been held in the deceased's sole name. The claimant had moved into the property in 1979 when she and the deceased had started living together. There was some dispute as to the condition of the property, although it was common ground that it was worth approximately £340,000. The business premises were freehold and owned by the deceased at the time of his death. A valuation report placed a value on those premises of £150,000 based on its current use, and £327,000 if sold for residential development. There was a dispute as to the relevant value to be placed on the estate's interest in the business and assets of the business either at the date of the deceased's death or at time of trial. The claimant applied, pursuant to the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision from the deceased's estate on the ground that the disposition of the deceased's estate was not such as to make reasonable financial provision for her.

Consideration was given to the value of the estate, the provisions of the deceased's will and what provision, if any should be made, pursuant to the Act.

The court ruled:
In a case such as the instant, it was, in addition to the factors set out in section 3 of the Act, open to the court to take account of the claimant's age, duration of the marriage, her contribution to the welfare of the family and in looking after the home and caring for the family. Moreover, it was necessary to take into account the provision the claimant might reasonably have expected to receive had, instead of the marriage being terminated by death, it ended by divorce. In the case of a spouse, “reasonable financial provision” meant reasonable in all the circumstances for a wife to receive and not simply what was required for maintenance.

In the instant case, the relevant factors included the length of the marriage, the role of the claimant, the financial circumstances of the dependants of the claimant, and the nature of the estate. On the evidence, the deceased's will had failed to make reasonable financial provision for his wife and partner of more than 20 years and the mother of his four sons. A proper and appropriate course to take was for a clean break by way of a lump sum award. Accordingly, the claimant would be awarded the former matrimonial home absolutely, a lump sum of £410,000 and £25,000 from funds held by the personal representatives.
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2. De Wind v Wedge

Cite: [2008] All ER (D) 300 (Mar)
Court: Chancery Division
Judge: Patten J
Hearing date: 19 March 2008
Alternative citations: [2008] EWHC 514 (Ch)
Representation: Michele Temple (instructed by Hodgsons & Mortimer) for the claimant; Bruce Walker (instructed by Freeman Johnson) for the defendant
Summary: administration of estates – intestacy – account – claimant granted letters of administration – claimant seeking account of proceeds of sale of property – defendant claiming proceeds gifted to him – whether defendant rebutting presumption of undue influence

The testatrix, the sole beneficial owner of the property in issue, died intestate 8 August 2001. The claimant and defendant were her children. In July 1992, the testatrix granted the defendant power of attorney to enable him to sell the property, which he did so for £56,000. Following the testatrix's death, the claimant wrote to the defendant asking about the proceeds of sale of the property. The defendant did not reply, and the claimant applied for and was granted letters of administration of the testatrix's estate. The claimant sought an account from the defendant of the proceeds of sale of the property.


The defendant argued that he was under no duty to account for the proceeds of sale as the testatrix had made a gift to him of the proceeds of the sale of the property as a result of her attitude to the claimant's impecuniosities and her dependence on and borrowings from members of the family. The claimant contended that any gift had been secured by presumed undue influence arising from the relationship of trust and confidence that subsisted between the testatrix and the defendant. The claim would be dismissed.

The burden was on the claimant to establish the necessary relationship of trust and confidence and the other primary facts surrounding the transaction from which the inference of undue influence could be drawn. The court's task was to set that evidence against the defendant's explanation of the transaction and decide whether he rebutted any inferences that might otherwise be made.

The events with which the proceedings were concerned took place more than 15 years ago, and there was little in the way of contemporaneous documentary evidence beyond the documents of title relating to the various property transactions and the subsequent correspondence between solicitors leading up to the issue of the claim. In the circumstances of the case, the evidence of the defendant was preferred, and the rejection of the claimant's evidence meant there was no positive evidence from her to support her case of undue influence. However, the facts threw the evidential burden on the defendant to show that the gift made had been the result of a genuine exercise of free will on the part of the testatrix. On the material before the court, the testatrix had decided of her own volition to make a gift of the proceeds of sale to the defendant, and she had not made that decision as a result of any influence or persuasion that might have been brought to bear.

Royal Bank of Scotland v Etridge (No 2) and other appeals, Barclays Bank plc v Coleman, Bank of Scotland v Bennett, Kenyon-Brown v Desmond Banks & Co (a firm) [2001] 4 All ER 449 applied; Goldsworthy v Brickell [1987] 1 All ER 853 applied; Allcard v Skinner (1887) 36 ChD 145 applied.
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3. Scotching v Birch

Cite: [2008] All ER (D) 265 (Mar)
Court: Chancery Division
Judge: Patten J
Hearing date: 18 March 2008
Representation: Jane Evans-Gordon (instructed by Purcell Solicitors) for the father; Andrea Markham (instructed by Brooke-Taylors) for the mother; Alistair MacDonald (instructed by Andersons Solicitors LLP) for the second to fourth defendants
Summary: executor and administrator – administrator - appointment in special circumstances – father seeking grant of letters of administration – mother on remand pending trial for murder of deceased – whether mother's actions precluding locus to apply for letters of administration – supreme Court Act 1981, section 116 – Non-Contentious Probate Rules 1987, SI 1987/2024, rule 22(1)(c)

Section 116 of the Supreme Court Act 1981 provides: “(1) If by reason of any special circumstances it appears to the High Court to be necessary or expedient to appoint as administrator some person other than the person who, but for this section, would in accordance with probate rules have been entitled to the grant, the court may in its discretion appoint as administrator such person as it thinks expedient. (2) Any grant of administration under this section may be limited in any way the court thinks fit”.

The claimant father and first defendant mother met in 2000. The mother had three children, the second to fourth defendants, from an earlier relationship. After the birth of J, the parents' relationship broke down, on the mother's case, as a result of the father's abusive behaviour. The father's contact with J dwindled until he issued contact proceedings in 2006. After the mother failed to attend a family court hearing, she was found unconscious having killed J and having attempted to kill herself.

She was charged with murder after her plea of guilty to manslaughter on the ground of diminished responsibility was rejected. Pursuant to section 46(1) of the Administration of Estates Act 1925, J's residuary estate was held on trust by the parents in equal shares. As such, J's body remained under the control of the coroner who, in light of the parents' dispute over where to bury the child, was only willing to release the body in accordance with a court order. The father sought the grant of letters of administration for J's estate, under rule 22(1)(c) of the Non-Contentious Probate Rules 1987, SI 1987/2024, as a person having a beneficial interest in the deceased's estate.

He sought to limit the grant of administration to himself, pursuant to section 116 of the Supreme Court Act 1981, on the basis that the mother lacked locus for applying for a grant on public policy grounds, namely the established rule that public policy prohibited a person from benefiting from the estate of an individual they had unlawfully killed. The mother argued that she had a right to apply for a grant of administration, pursuant to article 8 of the European Convention on Human Rights.

The application would be allowed.

Taking into account the competing interests of the parties' article 8 rights, the mother's rights did not override the well established and validated rule that a person should not benefit from their crimes. Accordingly, the mother lacked the locus to apply for a grant of letters of administration of J's estate, which would be granted to the father.

The father was entitled to a declaration that he was entitled to J's body.

Esfandiari v Secretary of State for Work and Pensions [2006] All ER (D) 339 (Mar) applied.
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4. Baker v Baker and another

Cite: [2008] All ER (D) 179 (Mar)
Court: Chancery Division
Judge: Paul Girolami QC sitting as a deputy judge of the High Court
Hearing date: 13 March 2008
Summary: probate – will – validity – testamentary capacity – deceased executing will whilst terminally ill – claimant seeking pronouncement against validity of will on basis of deceased's lack of capacity – whether will valid – Inheritance (Provision for Family and Dependants) Act 1975, section 1(1)(ba)

The claimant was the daughter of the deceased, B. The first claimant was B's brother, and the second defendant had been involved in a physical and emotional relationship with B since about 1988. In 1993, the second defendant moved into the home of B (the property). She retained her own home as a rental property until its sale in 2003. For some time, B had suffered from liver disease. On 7 April 2005, he collapsed and was admitted to a local hospital. From there he was transferred to a specialist liver intensive care unit. It became apparent that he was terminally ill. He was also found to be suffering from some degree of hepatic encephalopathy; changes in his neuro-psychiatric, or brain, functions brought about as a result of his liver disease. It was not contested that the consultant overseeing B's treatment had expressed the view that B's capacity to make and execute a will was questionable in light of the hepatic encephalopathy.

On 21 April, in the face of B's deteriorating condition, discussions were held between B and the parties in relation to B preparing a will. It appeared that B envisaged that both he and the second defendant would make wills at the same time and under which the estate of the first to die would be left to the other of them, and the estate of the survivor would be left to the claimant and the second defendant's daughter equally. Accordingly, the first defendant prepared wills in those terms, using a will pack purchased from a newsagents, and naming himself and the second defendant as executors. B executed his will the following day; however, the second defendant did not execute her will until some time later. B died on 27 April. Subsequently, the claimant issued the instant proceedings by which she sought a pronouncement against the validity of the will and a grant to herself of letters of administration. The second defendant counterclaimed seeking to have the will admitted to probate. Alternatively, she claimed that she was entitled to have the property transferred to her to give effect to an equity that had arisen in her favour by virtue of proprietary estoppel, or that she was entitled to an absolute interest in the entirety of B's estate in respect of reasonable financial pursuant to the Inheritance (Provision for Family and Dependants) Act 1975. A number of issues fell to be determined, including (i) whether the will was invalid by virtue of B's lack of testamentary capacity; (ii) whether an equity had arisen in the second defendant's favour by way of proprietary estoppel; and (iii) whether and to what extent the second defendant was entitled to provision under the 1975 Act. The court gave particular consideration to the entitlement under section 1(1)(ba) of the Act.

The court ruled:
On the evidence, B had lacked the requisite testamentary capacity to validly execute the will. In particular, the uncontested medical evidence and the fact that he had not questioned why the second defendant had failed to execute her will in the same terms at the same time supported that conclusion. Similarly, the second defendant had failed to demonstrate that equity had arisen in her favour by way of proprietary estoppel. However, the second defendant had demonstrated an entitlement to reasonable financial provision under section 1(1)(ba) of the 1975 Act. Accordingly, she would be entitled to a life interest in the property and its proceeds of sale.
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5. Rind v Theodore Goddard (a firm) and others

Cite: [2008] All ER (D) 134 (Mar)
Court: Chancery Division
Judge: Morgan J
Hearing date: 11 March 2008
Alternative citations: [2008] EWHC 459 (Ch)
Representation: Michael Soole QC (instructed by Dechert LLP) for the claimant; Paul Parker (instructed by Reynolds Porter Chamberlain LLP) for the first defendant; Edwin Johnson QC (instructed by Williams Holden Cooklin Gibbons LLP) for the second to fourth defendants
Summary: solicitor – negligence – cause of action – negligent advice - claimant alleging inheritance tax liability upon mother's death arising from negligent advice given by defendants – defendants denying claimant having cause of action – whether defendant entitled to summary judgment

The first defendant was a London firm of solicitors. The second to fourth defendants were partners in a Jersey based firm of solicitors with the same name (the Jersey firm). The second defendant, at the material times, had also been a partner in the first defendant. In 1965, the claimant's mother, S, became the freehold owner of an office building (the property). In 1985 and 1986 she received tax planning advice from the first defendant. On 21 July 1986, S wished to make a gift of the freehold of the property to the claimant. The property was transferred to GN Ltd, which held the legal title as nominee for the claimant. On 22 July, the claimant transferred his beneficial ownership of the property to SJP Ltd in exchange for 5,000 shares in that company. On 19 September, the claimant, as settlor, created a discretionary settlement known as the Phi Settlement. The potential beneficiaries were, inter alios, the claimant and his sister, M. On 21 September, the 5,000 shares in SJP Ltd were transferred to the trustees of the Phi Settlement. The gift of the property made by S gave rise to a capital gains tax liability. To meet that liability, she received a bank loan secured against her own home and GN Ltd's freehold interest in the property. That charge was granted in around June 1988. In January 1989, GN Ltd sold the property for a substantial sum. The bank had released the charge granted by GN Ltd to enable the sale to take place. A replacement security was secured in respect of a cash deposit account held by a company as nominees for the trustees of the Phi Settlement. Following a breakdown in the relationship between the claimant and M, the Phi Settlement was restructured in 1992. The cash account held as security for the loan was appointed for the benefit of the claimant. M received advice from the Jersey firm in relation to the transactions of 1988, 1989 and 1992. S died in September 2000. Her last will was a will dated 15 September 1989. By that will she left a large number of specific gifts and left the residuary of her estate on trust for the claimant and M equally. The executors named in the will renounced probate and the claimant and M were granted letters of probate with will annexed on 14 June 2001. Subsequently, the property fell to be included within S's estate for the purposes of calculation of inheritance tax on the basis that, notwithstanding the fact that she had disposed of her freehold interest more than seven years before her death, the securing of the charges in 1988, 1989 and 1992 had been a reservation of benefit. The claimant paid the due amount of inheritance tax. Subsequently, he issued proceedings whereby he alleged that the inheritance tax liability had arisen by virtue of the negligent estate planning advice given by the defendants to S. He maintained, inter alia, that the transactions giving rise to the inheritance tax liability had been subject to a continuing duty of care first arising when S received estate planning advice in 1985 and 1986. The defendants sought summary judgment on the claim.

A number of issues fell to be determined, including (i) whether any duty of care had been owed to the claimant and (ii) whether any properly pleaded cause of action had been statute barred.

The application would be dismissed.

In the instant case, the question of whether the claimant had a proper cause of action was not one of which could be summarily disposed. The circumstances were such that it might be open to the court to extend existing common law principles to allow the claimant to plead that the defendants had owed to him a duty of care as a future beneficiary of S's estate. It was not possible at the instant stage to hold that no such duty existed. A resolution of the issue as to the existence of a duty of care depended upon a detailed investigation of the facts which could only be conducted at trial. Similarly, it was arguable that any proper claim had not fallen foul of statutory limitation periods.

White v Jones [1995] 1 All ER 691 considered; Daniels v Thompson [2004] All ER (D) 357 (Mar) considered.
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6. Caudle v LD Law Ltd

Cite: [2008] All ER (D) 435 (Feb)
Court: Queen's Bench Division
Judge: Wyn Williams J
Hearing date: 29 February 2008
Alternative citations: [2008] EWHC 374 (QB)
Representation: Jonathan Miller (instructed by Barnes & Partners) for the claimant. Constance Mahoney instructed by and for the defendant.
Summary: administration of estates – grant of administration – claimant entitled in order of priority to apply for grant of letters of administration – entitlement to documentation concerning estate – claimant not requiring documentation to apply for grant – documentation not required to preserve estate – whether claimant entitled to maintain action for wrongful interference with documentation and for their delivery up

The claimant had a son with the deceased before their divorce. The deceased died intestate such that the son was the only heir. The deceased's parents took documentation concerning the estate to the defendant firm, which set about applying for letters of administration on their behalf. It wrote to the claimant informing him that as he had parental responsibility, he had to apply and that, because the son was under 18 years old, at least two administrators would be required with the second administrator being the next permitted representative, which was one of the deceased's parents. The claimant replied that he wanted to appoint a solicitor in the firm representing him as the second administrator and requested the documentation relating to the estate. Correspondence did not secure the delivery up of the documentation, and the claimant brought proceedings for wrongful interference with that documentation. The county court judge found that the claimant had no right to bring the proceedings, and the claimant appealed.

The defendant submitted, inter alia, that because the claimant had not obtained a grant of letters of administration at any time prior to the hearing in the county court, he had no right to bring an action for wrongful interference; pending any such grant, no one other than the public trustee, or someone specifically authorised by him, had an immediate right to the possession of documents such as those in question. The claimant contended that he had an immediate right to possession of the documents and thus could maintain an action for wrongful interference therewith because, as the father of the minor who was the sole beneficiary of the estate, he was the person entitled by priority to apply for the grant of letters of administration. He gave an example of the person who, by priority, was entitled to a grant of letters of administration and who was the sole beneficiary of the estate in question, entering the home of a person, who had died intestate, to remove documentation to facilitate the application for the grant, and submitted that it would be wholly inappropriate to conclude other than that the beneficiary had been entitled to do as he had done. In those circumstances, the claimant postulated that it was obvious that the beneficiary would be able to maintain an action for wrongful interference with the documentation if he discovered that the relevant documentation was in the possession of a trespasser in the deceased's home, who refused to hand them over. The defendant accepted that the beneficiary would be entitled to take effective practical action to prevent the destruction of property, but also submitted that he would not be competent to move for injunctive relief or for an order for delivery up. There was uncontroversial evidence that the claimant could have obtained copies of the documents in question.

The court ruled:
A person who was entitled to the grant of letters of administration had an immediate right to possession of personal property formerly owned by the deceased if it was necessary that he took such possession to safeguard the estate. Such a person was entitled to take legal action to enforce that right. It followed that it was impossible to hold that a person who had not been granted letters of administration, but who had the right to apply as a matter of priority, acquired an immediate right to possession of property formerly owned by the deceased in circumstances in which there was no immediate need for him to be in possession of such property.

It would be an extraordinary state of affairs if such a right did not exist. If a trespasser in the deceased's home was destroying the latter's property, it would appear extremely strange if nothing could be done immediately to prevent it. Further, there was no principle or practical reason why the law should confer the right to immediate possession of property upon an individual but nonetheless provide that such a right could not be enforced by legal action. Whilst in very unusual cases, the conclusion on the right to immediate possession might appear to work a possible injustice, in the vast majority of cases, the person entitled to a grant of letters of administration would, in fact, obtain possession of the property of the deceased. Once that had occurred, he could rely on that possession to ward off unmeritorious claims against it; only the Public Trustee, as legal owner, would have a better right to possession.

In the instant case, it could not be said that the claimant required the documentation so as to apply for a grant of letters of administration. The claimant could not argue that he needed to take possession of the documentation so as to safeguard the estate. Accordingly, the claimant had no right to immediate possession of the documents, and, consequently, no right to bring a claim for their delivery up.

Bowler v John Mowlem & Co Ltd [1954] 3 All ER 556 distinguished; Mills v Anderson [1984] 2 All ER 538 distinguished.
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Statutory instruments

1. SI 2008/605 Inheritance Tax (Delivery of Accounts) (Excepted Transfers and Excepted Terminations) Regulations 2008

Enabling power: Inheritance Tax Act 1984, section 256 (1) (a)
Commencement: 6 April 2008
Relevant legislation: Inheritance Tax Act 1984, section 256 (1) (a)
Summary: These Regulations are designed to reduce significantly the number of IHT accounts that would otherwise need to be delivered where there is not tax at stake, and little or no compliance risk. They reflect comments received in response to proposals published on the HM Revenue & Customs' website in 2007.

Increase the monetary limits below which an account does not have to be delivered, and link them to movements in the IHT nil rate band, and they align the treatment of excepted transfers and excepted terminations.

The Regulations have effect for chargeable events occurring on or after 6 April 2007. That is the start date HM Revenue & Customs mentioned when the initial proposals were published in 2007, so that accounts that would otherwise be due for chargeable events that have occurred earlier in the current tax year are covered by the new rules (IHT accounts are broadly due 12 months after the end of the month in which the chargeable event occurs).
SI 2002/1731 is revoked in relation to any excepted transfer or excepted termination made on or after 6 April 2008.
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2. SI 2008/606 Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations 2008

Enabling power: Inheritance Tax Act 1984, section 256 (1)(a)
Commencement: 6 April 2008
Relevant legislation: Inheritance Tax Act 1984, section 256 (1)(a)
Summary: Replace the Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations 2002 (SI 2002/1732) in relation to chargeable events occurring on or after 6 April 2007. The 2002 Regulations and these Regulations make provision in relation to the delivery of accounts and other information for inheritance tax purposes.

Provides that a person is not required to deliver an account for inheritance tax purposes under the Inheritance Tax Act 1984, section 216 of property comprised in a class of trusts where a chargeable event occurs on or after 6 April 2007. These trusts are defined as excepted settlements.

There are five categories of excepted settlement, all requiring there to be no qualifying interest in possession subsisting in the settled property, these are as follows. The first category is a settlement where the settled property can comprise only cash, the trustees must be resident in the United Kingdom, the settlor must not have provided any additions to the settled property following the commencement of the settlement or have created any other settlements on the same day and the value of the settled property at the time of the chargeable event must not exceed £1,000.

In relation to the other categories there are general requirements applying to all categories and a specific requirement. The general requirements are that the settlor is domiciled at the commencement of the settlement and thereafter until the chargeable event (or his death, if earlier), the trustees must be resident in the United Kingdom throughout the existence of the settlement and there must be no related settlements. The specific requirement is that the value transferred by the relevant notional chargeable transfer under the 1984 Act does not exceed 80% of the inheritance tax threshold for the year in which the chargeable event occurs, ignoring for the purpose of determining the value any liabilities, exemptions or reliefs that would otherwise be deductible under the 1984 Act. These other categories are as follows.

The second category is a settlement where there is a chargeable event on or after 6 April 2007 under section 64 (charge at ten-year anniversary). The condition limits the value transferred by the notional chargeable transfer described in section 66(3).

The third category is a settlement where there is a chargeable event on or after 6 April 2007 under section 65 (charge at other times) preceding the first ten-year anniversary of the settlement. The condition limits the value transferred by the notional chargeable transfer described in section 68(4).

The fourth category is a settlement where there is a chargeable event on or after 6 April 2007 under section 65 following one or more ten-year anniversary of the settlement. The condition limits the value transferred by the notional chargeable transfer described in section 66(3), taking into account section 69.

The fifth category is a settlement where there is a chargeable event on or after 6 April 2007 under section 71E (charge to tax on property in an Age 18-to-25 trust) by reason of an event within section 71F(2). The condition limits the value transferred by the notional chargeable transfer described in section 71F(8).

Provide for the discharge of trustees and property from tax in relation to property comprised in an excepted settlement in the first category.

Makes provision for excepted settlements in relation to transfers reported late under section 264 of the 1984 Act.
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3. SI 2008/611 Public Trustee (Fees) Order 2008

Enabling power: Public Trustee Act 1906, section 9(1)
Commencement: 1 April 2008
Relevant legislation: SI 1999/855, SI 2002/2232, SI 2003/690, SI 2004/799, SI 2005/351, SI 2007/681
Summary: Revokes, replaces and consolidates the Public Trustee (Fees) Order 1999. Specifies the fees payable in respect of the duties of the public trustee. The administration fee is payable in full, even if the public trustee ceases to act in the estate or trust, or part of it, in the course of the year, rather than the fee being payable in twelve equal instalments. Increases percentage of net capital value of the estate or trust used to calculate the administration fee to between 3-5 per cent.
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Features

1. Budget 2008: Consequential changes following transferability of IHT nil rate band (BN47)

Legislation will be introduced in the Finance Bill 2008 to allow any IHT nil rate band unused on a person's death to be transferred to the estate of their spouse or civil partner who dies after 8 October 2007.

As announced in the Pre-Budget Report, legislation will be introduced in the Finance Bill 2008 to allow any IHT nil rate band unused on a person's death to be transferred to the estate of their spouse or civil partner who dies after 8 October 2007.

With effect from 6 April 2008, an amendment will be made to the Capital Gains Act 1992, section 274 (TCGA) (which provides that where the value of an asset in a deceased person's estate has been ascertained for IHT purposes, that value also has effect for CGT purposes) to ensure that it will not have effect where the valuation of an asset does not have to be ascertained for IHT purposes on the death of an individual. So, for example, if the IHT valuation of an asset does not have to be ascertained until the death of the surviving spouse in order to establish the nil rate band that may be transferred, TCGA 1992, section 274 will not require that value to be used for any CGT calculation.
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2. Budget 2008: Inheritance Tax – transitional serial interests (BN46)

The rules over the transitional period are amended and the period extended by six months.

The Finance Act 2006, schedule 20, changed the IHT rules for interest in possession (IIP) trusts. However, it included a transitional period (from 22 March 2006 to 5 April 2008) to enable trustees to reorganise trusts set up before 22 March 2006 without being subject to the new rules. As the effect of the transitional provisions is unclear where pre-22 March 2006 IIP trusts are replaced with a “transitional serial interest” (as defined) for the same beneficiary, legislation will be introduced in the Finance Bill 2008 to clarify the position. It will ensure that the new rules will not have effect where this kind of change is made in the transitional period but will also ensure that the new rules will have effect as intended where an IIP trust is replaced after the transitional period with a new IIP trust (for either the same or a different beneficiary).

In addition, the transitional period will be extended by six months to 5 October 2008.
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Articles

1. Tax efficient wills

Journal name: Taxation
Author: Carl Islam
Citation: Taxation, 6 March 2008, 239
Issue date: 06 March 2008
Summary: Explains why the drafting of a tax-efficient will remains important. Advocates some effective planning points. Questions some of the possible ways to mitigate IHT via testamentary gifts.
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Books

1. How to book and claim discounts
  • Law Society Publishing: quote “Probate Section” to receive a 20 per cent discount off related titles (excluding directories) via Prolog at The Law Society, PO Box 99, Sudbury Suffolk CO10 2SN, telephone 0870 850 1422, fax 01787 313 995 or email lawsociety@prolog.uk.com.
  • LexisNexis Butterworths: quote “Law Society Section discount offer” when ordering via www.lexisnexis.co.uk, customer.services@lexisnexis.co.uk or 020 8662 2000.

This e-alert is not intended to provide comprehensive records of information concerning the probate sector. If you have any feedback or suggestions, please email probatesection@lawsociety.org.uk. This e-alert was created in conjunction with LexisNexis UK Legal Updater Service. For further information about any of the articles, please contact claire.melvin@lexisnexis.co.uk. The views expressed by the Legal Analysis interviewees are not necessarily those of the proprietor.
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