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Hi Alan, A client it preparing a will and the solicitor involved mentioned that the remainder interest could be deemed a discretionary trust and discretionary trust tax could apply. Basically the details are: A wills a life interest in land to B on the instruction that B leaves the land absolutely to any one of B's children if any and if not to anyone of A's other grandchildren. As B must dispose of the land to a specified group (either his children or his nieces/nephews) this means that this is a special power of appointment and as a result B only receives a life interest in the land as opposed to an absolute interest? On A's death then B will take a life interest in the land valued using the appropriate reduction factor and pay the necessary CAT. On B's death the appointed person, either one of his children or one of his nieces/nephews, takes an absolute interest and the disponer is A? Even if B does not make a will and appoint someone A's will states that in this case the land is left to all his grandchildren equally so the property is never actually settled on a trust and subject to the discretionary trust tax of 6% or the annual charge of 1%. Is this correct? What is the stamp duty payable in this scenario? Does the land get transferred into B's name on A's death and is subject to stamp duty on the full value or only the life interest value? And on B's death does the appointed person by B pay the stamp duty again on the full value of the land at that time? Thanks Paul

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Asked on 8 April 2014 8:36 am
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