England: ‘Groundbreaking’ decision lets families plan tax of ‘vegetative relatives’
Families can undertake inheritance tax planning for incapacitated relatives, an expert has said in the wake of a ruling from the Court of Protection.
A judge allowed the family to make tax exempt gifts on behalf of their millionaire brother, who has been in a coma for more than a decade, The Telegraph reports.
District Judge Sarah Ellington ruled that gifts made to family, charities and political organisations were in the 66-year-old’s best interests. He was left in a “persistent vegetative state” in 2007.
Lynne Rowland, a private client tax partner at Kingston Smith accountants, said the ruling was “groundbreaking” and that it sets a precedent for carers to make use of legal loopholes to reduce tax bills years after someone is unable to look after their own money – even where they have expressed no such wish to do so.
The responsibility for managing the £17 million fortune was given to the man’s brother, who won a plea to ratify a number of gifts that had already been made, as well as prospective ones from his £120,000 annual income.
Millions of pounds will be given to family and charity while thousands will go to political organisations, among them Labour and the successors to Red Banner and Charter 88, which the man helped fund.
The judge said his love for his family and his commitment to charity would have led him to “put his financial affairs on a better footing”.
Ms Rowland said: “This means that financial gifts can be made on behalf of a mentally incapable person without their explicit consent. It also has huge implications for inheritance tax … potentially saving thousands of pounds for the beneficiaries.”