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No IIP in respect of house where insufficient other assets to pay IHT on deceased’s estate

By Mark McLaughlin, March 2023

No interest in possession arose in an estate where the assets apart from the house occupied by a beneficiary under the terms of the deceased’s will were not sufficient to pay the inheritance tax on the estate. 

The testator (CR) was a widow. A family friend (LB) began visiting CR regularly from around 2002. When Mrs R’s health worsened in 2003, LB started spending several nights a week at the house, staying in the spare room.  

On 24 July 2003, CR made her last will. The beneficiaries were CR’s five nieces and nephews and LB’s sister (RS). The will provided that the house be retained as LB’s home during his lifetime, and for him to live there without charge (subject to him paying for insurance and maintenance).  

CR died on 2 October 2004. Her estate comprised little besides the house (its probate value was £300,000). An inheritance tax (IHT) liability of around £15,600 arose

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