The court considered the effectiveness of a gift from father to son for estate duty purposes, where the revenue said that the father had reseved an interest in the land to himself. The conveyance to the defendant donee contained the following clause: ‘the said Earl Grey did convey to the defendant . . all his real estate other than the mansion house and the appurtenances, to the use that the said Earl Grey should thenceforth during his life receive an annual rent-charge of 4000L to be issuing out of the said hereditament, and subject thereto to the use of the defendant in fee simple.’ This was held to reserve a benefit to the settlor. Rigby LJ: The reservation of the rentcharge and the son’s covenant to pay it were ‘so plain as to require no further notice.’
Vaughan Williams LJ said: ‘the son’s covenant to pay the donor’s debts was a sufficient reservation of a benefit, but such a benefit was ‘totally different from the prior estate created by the use in respect of the rentcharge, and I mention this because I am inclined to agree with the appellant that the rentcharge must be treated as something entirely outside the gift.’
Judges:
A.L.Smith LJ, Rigby LJ, Vaughan Williams LJ
Citations:
[1898] 2 QB 534
Jurisdiction:
England and Wales
Citing:
Appeal from – Attorney General v Earl Grey QBD 1898
. .
Cited by:
Appeal from – Grey (Earl) v Attorney General HL 1900
The donor conveyed land to his son by way of gift but reserved an annual rentcharge during his life which was charged on the land conveyed and which his son covenanted to pay (together with the other liabilities of the donor), and retained the right . .
Mentioned – Ingram and Palmer-Tomkinson (Executors of the Estate of Lady Jane Lindsay Morgan Ingram Deceased) v Commissioners of Inland Revenue CA 28-Jul-1997
The deceased had first conveyed property to her solicitor. Leases back were then created in her favour, and then the freeholds were conveyed at her direction to her children and grandchildren. They were potentially exempt transfers.
Held: . .
Cited – In re Nichols, deceased CA 2-Jan-1975
The father, Lord Nichols, gave property to his sons who then leased it back to him. On the father’s death the revenue claimed duty.
Held: Goff LJ: ‘Having thus reviewed the authorities, we return to the question what was given, and we think . .
Cited – St Aubyn v Attorney General HL 12-Jul-1951
The donor exercised powers of appointment ‘to make some part of the settled property his own’, and it was ‘wholly irrelevant that by a contemporaneous or later transaction he surrenders his life interest in other parts of it’. The different parts of . .
Lists of cited by and citing cases may be incomplete.
Inheritance Tax
Updated: 31 July 2022; Ref: scu.223758