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Accidental trust

06 March 2012
Issue: 4344 / Categories: Forum & Feedback , Inheritance Tax
A married couple have purchased a property in which their elderly aunt will be allowed to live for the rest of her life. Advice is required as to whether HMRC’s statement of practice 10/79 means that an interest in possession has been created

My clients a married couple in their early 50s recently bought a house from a housing association at a discount to its true value. The occupant of the house was the wife’s elderly aunt aged 77.

Subsequent to buying this house the couple then prepared a legal agreement giving the elderly aunt the right to occupy the house at no rent for the remainder of her natural life.

The couple also agreed to pay all the normal running costs on the house in particular heating lighting repairs maintenance insurance etc.

HMRC’s press release of 15 August 1979 states that if trustees permit a beneficiary to occupy a dwelling house at less than full commercial rent this will create an interest in possession.

Does this now mean that my clients have created a relevant property trust by virtue of...

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