A father, equitable tenant for life of an estate, had raised sums amounting to pounds 59,121 on the security of his life estate and of certain policies of insurance on his life. By agreement with his son, equitable tenant in tail in remainder, the estate was disentailed and pounds 71,000 raised on mortgage of the fee, out of which the mortgages for pounds 59,121 were paid off. Under the same agreement the policies, having been reassigned to the tenant for life, were assigned by him to his son, and the estate was re-settled upon trust, inter alia, out of the rents and profits to pay the interest on the mortgage debt of pounds 71,000 and the premiums necessary for the policies, but in the event of any of the policies being surrendered by the son, then to pay the amount that would otherwise have been payable as a premium to the son, and to apply the residue of the rents and profits in paying to the son the sum of pounds 1000 a-year, and, subject to the trusts already mentioned, in trust for the tenant for life with remainder on his death to his son in fee. Subsequently, in consideration of the sum of pounds 4100, the tenant for life assigned his life estate to the son, subject, however, to the trust for keeping on foot the policies, and the amount of the price paid to the tenant for life was calculated on the footing that the life estate was subject to that trust. The policies were kept up under the before-mentioned trust, and on the death of the tenant for life the son received the sums due under the policies.
Held ( reversing the judgment of the Court of Appeal) that, as the son had given full value for the policies, they were not ‘provided’ by the father within the meaning of section 2 (1) ( d) of the Finance Act 1894, and that consequently no estate duty was payable on the father’s death in respect of the moneys received under them.
Judges:
Lord Chancellor (Loreburn), Lords Macnaghten, James of Hereford, Robertson, and Atkinson
Citations:
[1906] UKHL 986
Links:
Jurisdiction:
England and Wales
Inheritance Tax
Updated: 29 May 2022; Ref: scu.625472