Elderly Man Lacked Capacity to Make Final Will
The High Court recently upheld a claim that an elderly man’s final will was invalid on the grounds that he lacked testamentary capacity. The man and his wife had...
Continue readingThe importance of considering the fine details of proposed arrangements was sharply illustrated in a recent case in which the High Court accepted a claim by HM Revenue and Customs (HMRC) that a gift to a charity did not qualify for exemption from Inheritance Tax (IHT).
The case arose after a resident of Jersey died, leaving a bequest to a trust which was established for charitable purposes, but was not based in the UK. The purpose of the trust was to enable a parish in Jersey to provide homes for elderly parishioners. The executors of the estate claimed that the bequest was exempt from IHT under the rules that make gifts to charities not taxable.
HMRC claimed that the sum settled into the trust was taxable to IHT, because the legislation had a clear implication that such trusts have to be subject to the jurisdiction of the courts of the UK.
The Court agreed with HMRC, ruling that the expression ‘held on trust for charitable purposes’ in the relevant Act requires not only that the objects of the charity be UK law charitable purposes but also that the relevant trust be subject to the jurisdiction of the UK courts.
Whilst it is always advisable to consider from every angle the implications of such arrangements, this is especially important where there is an overseas element to the proposed arrangements or where domiciliary issues may be in point.
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