Taxation Readers’ Forum: Estate and bare trust

Writing for Taxation magazine’s Readers’ Forum, BKL tax consultant Terry Jordan responds to a reader’s query about minimising the capital gains tax arising on an estate asset.

‘A widow died in March 2020 leaving her estate in equal shares to her three adult children. Probate has been granted to one of the children as sole executor. The estate is straightforward and all the assets and liabilities have been ascertained and liabilities settled. There was no inheritance tax to pay but a return was submitted to HMRC.

The deceased’s home is still registered in her name. A professional valuation was obtained for probate, but the executor has now been advised of a possible £30,000 post-death increase in value because of its rural setting and suitability for homeworking. Despite this, there would still have not been an inheritance tax liability.

To avoid a capital gain on the executor, I suggested that the beneficial interest in the property be transferred to the three siblings immediately. Their annual allowances will mean no capital gains tax. To save unnecessary costs, the property could be left in the name of the deceased up to the sale, with the executor acting for the siblings as a bare trustee.

The solicitor dealing with the estate seems unsure of the documents required to transfer the property as proposed. Can readers advise on the paperwork needed so that the deceased’s former residence ceases to be an asset of the estate and becomes beneficially owned by the siblings while remaining registered at the Land Registry in the deceased’s name?

Alternatively, has the administration come to an end, with the executor already acting as a bare trustee (for herself and her two siblings). Would a letter from her to the beneficiaries, saying that the administration of the estate is complete and all assets are now held by her on a bare trust for the equal benefit of all three of them, be sufficient? When the property is sold they could each disclose a one-third interest on their respective tax returns.

Are things that easy?’ Query 19,581 – Landlord.

Terry Jordan’s reply: It will be best to assent the property to the three children

‘We are told that the estate of the mother who died in March this year has, in effect, been wound up, subject to disposing of the property which may have increased in value by £30,000 in the interim because of its location. Executors are entitled to the same annual exemption from capital gains tax as an individual for the tax year of death and the following two tax years so £12,300 this tax year.

Even if the increased value were substituted for the date of death value, we are told that there would still be no inheritance tax to pay. HMRC resists the use of the ‘loss on sale’ provisions in IHTA 1984, s 190 et seq to substitute a higher value in such circumstances – see HMRC’s Inheritance Tax Manual at IHTM33026.

The administration of an estate ends when all the assets have been ascertained and the liabilities discharged, including any inheritance tax. In this case, it appears that the administration is continuing.

On the death of a sole owner of land, the legal estate vests in the executor or administrator by operation of law (Administration of Estates Act 1925, s 1(1)). It does not have to be completed by registration. Once the grant of representation has been obtained the personal representative may:

  • retain the property and apply to register himself as proprietor;
  • execute an assent in favour of the beneficiaries; or
  • transfer the property to a third party.

The beneficiaries merely have choses in action in the estate and only obtain rights to the property when the executor, by means of an assent, indicates that the property is not required for the purposes of the administration. Although the assent must be in writing, it does not have to take the form of a deed and there is no strict requirement for a witness.

Accordingly, in this case it seems that it will be best to assent the property to the three children. That will not constitute a disposal by the executor for capital gains tax purposes in view of TCGA 1992, s 62(4) and the children will each be able to set their annual exemptions against the gain on sale.’

The article is also available on the Taxation website.

For more information, please get in touch with your usual BKL contact or use our enquiry form.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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