Estate Duty surviving spouse exemption: meaning of competent to dispose
The words ‘competent to dispose’ are not defined in the legislation, but their meaning is expanded by FA1894/S22 (2)(a) as follows:
‘A person is competent to dispose of property if he has such an estate or interest therein or such general power as would enable him to dispose of it. (IHTM04458) And the expression ‘general power’ includes every power or authority enabling the donee or other holder thereof to appoint or dispose of property as he thinks fit, whether exercisable by deed or will, or both.’
The ‘person’ referred to in FA1894/S22 (2)(a) is the surviving spouse on whose death the claim for exemption arises, not some other person, for example, a reversioner who died between the deaths of the two spouses.
It is clear from the Coutts case (see IHTM04456) that the exemption is not lost unless the surviving spouse was competent to dispose of the actual settled property on which duty was paid on the first death. Competency to dispose of, for example, a defeasible interest in the settled property does not prevent the exemption from applying.