An heir of entail in possession of Scottish heritage carried out disentailing procedure. The heritage was disentailed, the valued interests of the succeeding heirs being charged thereon. This was admittedly done with the object of reducing the total value of the estate for estate duty purposes by the amounts so charged upon the lands. Held (Lords Collins and Shaw of Dunfermline diss.) that the interests charged upon the land were incumbrances created bona fide and wholly for the deceased’s own use and benefit, and that accordingly those amounts fell to be deducted from the deceased’s estate under section 7, sub-section 1 ( a), of the Finance Act 1894.
Per Lord Macnaghten – ‘The incumbrances intended to secure those debts were created bona fide in the only sense in which bona fides can be used in such a connection, that is to say, the debts and incumbrances were not fictitious or colourable, but real and genuine to all intents and purposes. Were these debts and incumbrances incurred and created ‘wholly for the deceased’s own use and benefit?’ . . . It seems to me that the words of the enactment are satisfied if the direct and immediate purpose of the person incurring the debt, or creating the incumbrance, is to make himself master of a sum of money over which he and he alone has power of disposition; and that it was not intended that there should be any inquiry into the ulterior and more remote purposes of the transaction or any investigation into motives.’
Judges:
Lord Chancellor (Loreburn), Lords Macnaghten, Atkinson, Collins, and Shaw
Citations:
[1909] UKHL 570
Links:
Jurisdiction:
England and Wales
Inheritance Tax
Updated: 25 April 2022; Ref: scu.620585