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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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.
Agreed, although it is more than possible. In my view it's a no-brainer re any CGT uplift.
If he only said he 'wanted to transfer a 50% share', does this really amount to oral declaration of trust?
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
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?
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Mascarpone
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.
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.)]
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).
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.
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.
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.