Readers' Forum
Replies to Queries — 3
Caring companion
Readers' Forum
Replies to Queries — 3
Caring companion
My client is in his 80s and in poor health. His companion has looked after him for 20 years and he has written to her confirming the verbal assurance he gave her six years ago that, in consideration of her care for him in his advanced years, he has given her the right to live in his apartment with him rent free for the rest of her life, but after his death she should be responsible for the council tax and other day to day outgoings. My client did this because she recently sold her own flat and, although he has confirmed the verbal assurance in his will, he felt it proper to confirm it in writing.
Do readers consider that following my client's death in the future, his executor would have a good claim for a percentage deduction from the open market value of the flat for inheritance tax purposes on the basis of his companion's dependency under sections 162 and 163, Inheritance Tax Act 1984? If so, what percentage would apply and would the doctrine of estoppel be sufficient to support the claim, thereby enabling my client to change his will so that post-death occupation of the flat by the companion will not be confused with a bequest? Should my client grant his companion a formal tenancy now on the basis outlined above or would a tenancy create an interest in possession?
Readers' views on the tax and (if possible) legal implications are welcomed.
(Query T16,454)
