New Square Chambers address the question: ‘When is property added to a settlement “excluded property”?’
The Inheritance Tax Act 1984, s48(3), provides that foreign property which is settled property is excluded property for IHT purposes unless the settlor was domiciled in the UK at the time the settlement was made. Therefore if a settlement was made when the settlor was domiciled outside the UK, he then subsequently becomes domiciled in the UK and then adds the foreign property – it will be excluded.
This case has confirmed the view of HMRC that a UK domiciled settlor cannot add foreign property with the status of excluded property to a settlement made by him when he was not UK domiciled.
For the full article: http://www.newsquarechambers.co.uk/files/Publications/WRSS%20Trusts%20Final.pdf
Chekov v Fryer and Fryer [2015] EWHC 1642 (Ch)
This case concerns a comparatively rare situation. The Claimant in this case commenced a claim under the Inheritance (Provision for Family and Dependants) Act 1975 in relation to her ex-husband’s estate. This was challenged by his sons, who were also acting as his executors. There was a clean break order within the divorce proceedings which stated that neither spouse could claim against the estate of the other unless they remarried. At the time of the ex-husband’s death, the couple were cohabiting again.
The judgment relies upon the apparent inconsistency should Parliament be taken to have intended a former spouse who was cohabiting with another person to be eligible, but not a former spouse who was cohabiting with the deceased. It further relies on the apparent contradiction between a person who divorces and remarries the deceased being eligible and a person who divorces and proceeds to cohabit with the deceased being ineligible.
The judgment deals only with the Judge’s decision to dismiss the Defendants application to strike out the claim. It does not cover what the Claimant would be entitled to receive from the estate.
For the judgment: http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2015/1642.html&query=chekov+v+fryer*&method=all
Harris v Earwicker[2015] EWHC 1915 (Ch)
In this case, a residuary beneficiary successfully applied for the removal of a solicitor-executor. The grounds submitted for the removal included:
(a) The deceased’s residential property had been sold at an undervalue
(b) There was a conflict of interest (primarily relating to the beneficiary’s intimated professional negligence proceedings against the solicitor-executor)
(c) The solicitor-executor was in breach of a requirement of the Financial Services and Markets Act 2000
(d) The executors failed to immediately notify the beneficiaries of the deceased’s will
(e) The executors had failed to pay the beneficiary’s pecuniary legacy
(f) The executors had failed to prepared an inventory of the items the deceased wanted to leave to his children
(g) There was a discrepancy in the tax return (which was corrected at no loss to the estate)
(h) The professional fees were too high
Chief Master Marsh held that there was no reason to find any wrongdoing or fault on the part of the executors. Nevertheless due to the breakdown in relations between the solicitor-executor and the beneficiaries, it was in the best interests of the beneficiaries as a whole that he be removed.
The residuary beneficiary had sought the appointment of two other executors. It is noteworthy in this case that the Chief Master was concerned that the statements submitted to the court were altered pro forma statements and lacked any personal insight into the reasons why the opinions concerning fitness to act were held.
Wilby v Rigby [2015] EWHC 2394
The claimant applied for the removal of the defendant, her brother, as an executor of their late mother's estate and for him to account for rent over a three year period in respect of the property which was the main asset of the estate.
The court held that it was clear that the parties could not get on with one another and that it was clearly appropriate to remove them both under the Administration of Justice Act 1985 s50. On the parties’ agreement, the court was prepared to appoint the claimant's son and the defendant's partner as joint administrators or alternatively to appoint a local, independent probate solicitor. The Claimant succeeded in part in respect of the rental income claim. It was deemed reasonable for the defendant to allow his partner's grandson to occupy the property rent-free for a period while carrying out improvements however thereafter he was liable for the market rent for 33 months with interest.
A note of the decision can be found at Lawtel Report Document N