Interests in possession: addition of settled property or value: introduction
The value of settled property may be enhanced by either growth in the value of the funds that were originally settled, the addition of more property or a change in the property that increases its value.
Where the property is:
- subject to an interest in possession (IIP) in settled property which came into existence before 22 March 2006, or
- an immediate post death interest,
- a disabled person’s interest or
- a transitional serial interest (IHTM16061),
it is necessary to establish whether
- the addition is a transfer of value,
- it is a disposition which results in added settled property under IHTA84/S43,
- any added settled property is relevant property, or
- the result is only adding value to the existing settled property.
Simon created a settlement in 1994 under which the trustees hold securities for Lesley for life. If Simon added further securities by a disposition in 2007, that would be an addition of property to the settlement.
The effect of the 2006 legislation on additions of property is considered at IHTM16075.
- Simon had not made a disposition to add property but, by 2007, the value of the settled fund had grown, or
- Simon had been entitled to an absolute reversion under another settlement and in 2000 Simon had added that reversion to the settlement; and the life tenant, James, had died in 2007
then, in each case, there is an increase in value to the settlement, but there is no disposition by Simon or anyone else that adds property to the settlement.
- In the first case, the increase in value has resulted from capital growth.
- In the second case, Simon had an absolute reversion subject to the death of life tenant. He assigns that reversion to Lesley for life. Until the life tenant’s death, Lesley had a qualifying IIP in the reversion. On the life tenant’s death Lesley became entitled to a qualifying IIP in the property underlying that reversion. This did not involve a disposition. All that changed was the nature of the property in which Lesley’s interest subsisted.
The effect of the 2006 legislation where there are additions of value is considered at IHTM16076.