Oral declaration of trust - deceased beneficiary

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Husband owned property which he might sell in future. He made an oral declaration of trust transferring 50% then she could use her annual exmeption and lower rate band. CG70291 permits this provided it is evidenced in writing at some stage. Wife died before the solicitor prepared the declaration document. Question: can husband still proceed with written declaration of trust confirming previous oral declaration?

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Portia profile image
By Portia Nina Levin
23rd Jul 2018 15:38

What happens to the wife's 50% on her death?

Why doesn't the husband do a deed saying that he transferred all of it to her. Then, when he gets it back on her death, he gets an uplift in the CGT base cost. Can you see HMRC's point of view here?

But yes. It is possible. The wife doesn't need to sign anything.

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Replying to Portia Nina Levin:
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By Justin Bryant
23rd Jul 2018 15:48

Agreed, although it is more than possible. In my view it's a no-brainer re any CGT uplift.

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Replying to Portia Nina Levin:
Morph
By kevinringer
24th Jul 2018 08:44

I agree 100% would be more tax-efficient but husband had phoned the solicitor before wife died to say he wanted to transfer 50% but wife died before the deed was drawn up. Solicitor not said anything about doing post-death transfer which I why I wanted to sound it out first.

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Replying to kevinringer:
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By Justin Bryant
24th Jul 2018 09:41

It would probably be best to see a different solicitor who understands tax etc.

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Replying to kevinringer:
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By chicken farmer
24th Jul 2018 10:21

If he only said he 'wanted to transfer a 50% share', does this really amount to oral declaration of trust?

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Replying to chicken farmer:
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By Justin Bryant
01st Aug 2018 12:23

Yes; or words to that effect. A decent solicitor would confirm that to you. See para 17 here re such equitable principles:
http://www.bailii.org/uk/cases/UKPC/2018/21.html

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Replying to Justin Bryant:
Portia profile image
By Portia Nina Levin
24th Jul 2018 10:58

Isn't 'decent solicitor' an oxymoron?

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Replying to Portia Nina Levin:
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By Justin Bryant
24th Jul 2018 11:19

You've use that joke before (a number of times) I believe.

Here's one for you. What cheese do you use to disguise a small horse?
........
........
........
........
Mascarpone

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By Tax Dragon
24th Jul 2018 13:22

What's the point? Either there was a trust, or there wasn't.

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Replying to Tax Dragon:
Portia profile image
By Portia Nina Levin
24th Jul 2018 13:32

Wasn't that the question?

When somebody asks you, "is the sky blue?", you can't (under normal conventions) answer, "well, what colour is it?"

If a layperson communicates their desire to a solicitor to gift property that they own henceforth to A N other, and the solicitor then just sits there with his finger up his @r5e, who's the beneficial owner of the property. There is a clear intention, that has been communicated to the solicitor for immediate action; due to the solicitors inaction it is simply undocumented.

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Replying to Portia Nina Levin:
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By Tax Dragon
24th Jul 2018 14:21

Does (formally) documenting it now have any tax effect? [Contemporaneous documents exist in the form of the solicitor's file note/the letter or email giving the instructions/other. (Which is one reason why, incidentally, Justin's suggestion of using another solicitor, is silly.)]

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Replying to Portia Nina Levin:
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By Justin Bryant
24th Jul 2018 14:34

Although TD probably doesn't realise it, his question is a valid one for the following reasons. Under LPA 1925 the trust only has to be documented re enforceability, so strictly speaking since there is no argument re enforceability it needn't actually be documented in this case and the only reason we are suggesting that is so that HMRC will not cause trouble there and also in case the donor suddenly drops dead (in which case you would have to rely on 2nd hand evidence re the trust which is never ideal).

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Replying to Justin Bryant:
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By Tax Dragon
24th Jul 2018 14:30

Thanks JB. Praise indeed.

Incidentally, I agree with chicken farmer - there's a difference between giving instructions to set up a trust and setting up a trust.

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Replying to Tax Dragon:
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By Justin Bryant
24th Jul 2018 14:51

Although the donor may not have appreciated it in such terms, the instruction would have been to document the oral trust (that became binding yet potentially unenforceable once he agreed verbally to give her 50% - a bit like how you can be bound by an oral contract - but that is enforceable without writing). Nothing more, nothing less (unless the donor actually said "I will give you 50% conditional on me putting it in writing" - and such a conditional gift would be pretty unlikely). I will end there.

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Replying to Justin Bryant:
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By Tax Dragon
24th Jul 2018 14:51

Correct. The solicitor best placed to interpret the instructions received would be the one who received those instructions. A trust may or may not have existed by that stage. I don't see that documenting it now clarifies or confirms anything - but we have already agreed that point.

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