The High Court allowed the rectification of a trust deed that would otherwise have resulted in an immediate inheritance tax charge.
The claimant sought professional advice in 2001 about inheritance tax (IHT) mitigation on her death. She was advised to enter into a ‘double trust’ arrangement in respect of her house.
The arrangement broadly involved: (1) creating a life interest trust (‘BPT’) under which she reserved a life interest in the trust fund; (2) creating a second interest in possession trust for others whom she wished to benefit (‘BFT’); (3) the sale of her house to the trustees of BPT, leaving the purchase price outstanding; and (4) assigning the resultant debt to the trustees of BFT.
The claimant understood that there would be no charge to inheritance tax (IHT) at the outset; if she survived at least three years, IHT on her death would be mitigated, and,
