Comments on: What is the difference between a Deed of Gift and a Gift with Reservation? http://www.onlinegifts.org.uk/16/what-is-the-difference-between-a-deed-of-gift-and-a-gift-with-reservation/ Some ideas on what to buy for friends and family Tue, 07 Sep 2010 17:27:06 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: Adam M http://www.onlinegifts.org.uk/16/what-is-the-difference-between-a-deed-of-gift-and-a-gift-with-reservation/comment-page-1/#comment-2 Adam M Fri, 18 Apr 2008 06:47:56 +0000 http://www.onlinegifts.org.uk/law-ethics/what-is-the-difference-between-a-deed-of-gift-and-a-gift-with-reservation/#comment-2 As you rightly say, your elderly relative signed a 'Deed of Gift' to try to avoid paying inheritance tax. This works as a gift to another individual is exempt from inheritance tax AS LONG as the indivudal who makes the gift survives seven years. However this was a 'Gift with a Reservation of Benefit'. As such, if your elderly relative was still living in it at the time of death, it is treated as if it was still owned (s102(3) Finance Act 1986) by him BUT ONLY FOR TAX PURPOSES. A gift with reservation of benefit has consequences for the amount of inheritance tax your elderly relative's estate will pay on the house, but NOT for the ownership of the house. The deed of gift is not void generally, only in relation to tax in an odd kind of way. It in no way affects the transfer of ownership from your elderly relative to his son. The asset of the farm belongs to the son. If that's not clear, please put more information and I'll clarify :) As you rightly say, your elderly relative signed a ‘Deed of Gift’ to try to avoid paying inheritance tax. This works as a gift to another individual is exempt from inheritance tax AS LONG as the indivudal who makes the gift survives seven years.

However this was a ‘Gift with a Reservation of Benefit’. As such, if your elderly relative was still living in it at the time of death, it is treated as if it was still owned (s102(3) Finance Act 1986) by him BUT ONLY FOR TAX PURPOSES.

A gift with reservation of benefit has consequences for the amount of inheritance tax your elderly relative’s estate will pay on the house, but NOT for the ownership of the house. The deed of gift is not void generally, only in relation to tax in an odd kind of way.

It in no way affects the transfer of ownership from your elderly relative to his son. The asset of the farm belongs to the son.

If that’s not clear, please put more information and I’ll clarify :)

]]>