Bob Perkins, Technical Manager, Origen, says:
"The case of Dr Phizackerley will confuse people and may call into question planning that has already been undertaken to date on what was considered to be a trusted basis. It is certainly a concern and clients should be well advised to revisit that planning to see what if anything has changed.
In this case, the point seems to be that the transfer of the property into tenancies in common resulted in the creation of an artificial incumbrance that fell foul of an anti-avoidance provision under the IHTA1986. As such, the IOU that was given by Mrs Phizackerley’s personal representatives to the Trustees of the Trust created under her Will was deemed not to be a reduction on Dr Phizackerley’s estate on his subsequent death.
This is a bit of a strange and disturbing decision in a way in that with other aspects of marital matters, the parties are generally considered to have each contributed in some form to the assets that have accumulated during a marriage, this includes retirement benefits. Whilst Mrs Phizackerley may have not made a monetary contribution it is possibly arguable that she could have contributed in some other way (though this argument was not accepted by the Special Commissioner).
It does not in my view alter nil rate band planning except in cases where the Trustees are accepting an IOU from the deceased’s personal representatives or the surviving partner.
At Origen, it has long been our practice to ensure that our clients are made aware of the planning opportunities that exist for using both nil rate bands. We prefer to use assets other than the family home as far as possible because we recognise that there are some issues surrounding the use of the property which means that it may not be appropriate for everyone. Our view has been and remains that, because there have always been conflicting views as to the efficacy of the use of Will Trusts using the property, great care needs to be taken over the type of Trust used and personal circumstances of the persons concerned need to be taken into account, individuals should not proceed with this type of planning without first seeking specific legal advice.
The decision of the Special Commissioner has however, clouded the issue somewhat and Solicitors will need to get to grips with what advice they may have to give in future and whether any recent advice needs to be revisited.
-Ends-
Notes to editors
Origen is one of the UK’s leading providers of independent financial advice and services.
Origen’s principal lines of business are:
- advice to small/medium sized companies including specialist planning for the owner-directors,
- communication and education to employees of large corporate clients including executive counselling services and pre-retirement seminars,
- private client advice and solutions,
- provision of advice to affinity groups such as newspaper readers.
Origen has significant expertise in the corporate and high net worth areas. It has its own Self Administered Propositions, a dedicated Research department, Discretionary Fund Management business, Annuity, Mortgage and Healthcare operations.
AEGON UK
- AEGON has assets under administration of £45.2 billion and employs over 4,000 staff. AEGON is part of the AEGON Group, which is one of the world’s largest listed insurers
Jonathan Atkins