Family home ― co-ownership / co-occupation arrangements

Produced by Tolley in association with

Trusts and Inheritance Tax

Guidance

The family home will often be the most valuable asset in a client’s estate and advisors are frequently asked if there are ways to mitigate inheritance tax (IHT) on the home while the client remains in residence.

Various anti-avoidance measures make this difficult. The principal difficulties for IHT are the gifts with reservation of benefit (GWR) and pre-owned assets tax (POAT) rules, considered further below.

Any dealings with the family home must also take account of capital gains tax (CGT) and the valuable principal private residence relief (PPR) in particular. Ideal planning will aim to preserve this as well as reducing the IHT burden, except in rare cases where the home is never likely to be disposed of.

Non-tax issues are paramount and home owners considering a tax mitigation arrangement should be wary of any risk to their continued occupation of the property if this becomes reliant on the consent or co-operation of other family members. Therefore, any IHT planning involving the home should only

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Emma Haley

Associate at Boodle Hatfield LLP

Emma Haley is a senior associate solicitor at leading private client firm, Boodle Hatfield LLP, renowned for providing first-class and practical legal advice to wealthy clients around the world. Emma has many years experience in dealing with all aspects of wills, probate, capital taxation and succession planning as well as UK and offshore trusts. Emma currently heads up a technical know-how team and is a regular writer and lecturer on estate planning and inheritance tax and also a member of the Society of Trust and Estate Practitioners.

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