The person who could sign a trust had already passed away — No Settlor, No Trust Deed. …….We Found Another Way.
Beneficial Ownership, Resulting Trusts, and UK Inheritance Tax: A Case Study in Cross-Border Estate Planning By Pavan Nagori, Finawis Advisors
Introduction
Inheritance tax planning rarely follows a straight line. The most compelling cases are those where the facts on the ground tell a story that the legal paperwork has not yet caught up with — and where a practitioner’s job is to bridge that gap through creativity, technical rigour, and persistence. This is one such case.
The Facts
Our client was a Kenyan national, domiciled and resident in Kenya at the time of his passing. His estate included two UK-situated assets: a residential property and a portfolio of fixed deposits, with a combined value approaching £800,000.
Under UK inheritance tax rules, assets situated in the United Kingdom are subject to IHT regardless of the deceased’s domicile. For a non-UK domiciliary, only UK-sited assets fall within the charge — but that charge is absolute. There is no treaty exemption between the UK and Kenya, and there is no relief available simply by virtue of the deceased being a foreign national. The starting position, therefore, was that the full £800,000 estate faced a potential IHT liability.
Or so it appeared.
A Closer Look at the Property
In the course of our detailed discussions with the family, a crucial fact emerged. The residential property — registered in the name of the deceased father — had never truly been his in any meaningful sense.
The property had been purchased by the father specifically for his son, our client. From the very day of purchase, it was our client who occupied the property as his home. When he eventually moved out, it was our client who let the property, collected the rental income, and declared that income in his own personal tax filings. No rental income ever passed through the father’s hands; no benefit from the property was ever enjoyed by him. The father’s name appeared on the title — but that, in substance, was all.
In equity, this is a classic resulting trust scenario. Where a property is purchased by one person for the benefit of another, and the conduct of all parties is consistent with that beneficial arrangement over a sustained period, the law recognises that the legal titleholder holds the property not as beneficial owner but as trustee for the true beneficial owner.
Section 53(1)(b) of the Law of Property Act 1925 provides the statutory framework for the creation and evidencing of trusts of land. The beneficial interest in this property, properly analysed, had always belonged to our client — not to his father.
The Technical Problem
Identifying a resulting trust is one thing. Evidencing and formalising it, in circumstances where the legal titleholder has since passed away, is quite another.
The conventional route would be to obtain a formal declaration of trust from the titleholder, confirming his status as trustee and acknowledging the beneficial ownership of his son. That route was, self-evidently, no longer available.
This created a procedural impasse that required lateral thinking. A wealth of supporting evidence existed — decades of conduct, rental declarations, family understanding — but translating that evidence into a legally operative outcome demanded a fresh approach.
The Solution: A Court-Directed Declaration Under TLATA 1996
We assembled a comprehensive body of evidence: sworn affidavits from all of the deceased father’s children, each confirming their understanding that the property had always been purchased for their brother, that he was the beneficial owner throughout, and that they formally disclaimed any interest in the property as part of their father’s estate. This was not merely a matter of family consensus; each affidavit was carefully structured to address the legal elements necessary to establish the resulting trust on the evidence.
The critical procedural step, however, was the decision to approach the courts under the Trusts of Land and Appointment of Trustees Act 1996 (TLATA). TLATA gives the court wide jurisdiction to make declarations regarding the nature and extent of beneficial interests in land. Rather than attempting to construct a trust instrument in the absence of the settlor, we invited the court to adjudicate on the existing equitable position — to look at the full body of evidence and confirm what the law had always recognised to be true.
The court agreed.
The Outcome
The court issued an order formally declaring the trust in favour of our client and, crucially, confirming that the property formed no part of the deceased father’s estate.
The consequences for IHT were transformative. The property — representing the most substantial asset in the apparent estate — was removed from the scope of the charge entirely. A liability that had initially appeared inevitable was, through rigorous legal analysis and careful court engagement, legitimately eliminated.
Why This Matters
This case illustrates several important principles for cross-border estate planning practitioners.
First, the beneficial ownership analysis must always precede the tax analysis. It is a common error to treat the register of title as definitive. Equity looks through form to substance, and in many family arrangements — particularly across jurisdictions where informal property transfers are culturally common — the legal and beneficial ownership of an asset can diverge significantly from what the paperwork suggests.
Second, the absence of a living settlor is not an insurmountable barrier. Where equitable interests already exist on the facts, the courts have the tools — under TOLATA and in equity more broadly — to recognise and declare those interests. The practitioner’s role is to marshal the evidence and identify the correct procedural pathway.
Third, this case is a reminder that inheritance tax planning is not solely about structures and instruments put in place before death. Post-death analysis of existing beneficial arrangements, carried out with sufficient technical depth, can yield outcomes that are equally powerful.
Conclusion
A £800,000 estate. A property held in a father’s name for decades. And a son who had always been its true owner — but who lacked the legal machinery, in the conventional sense, to prove it.
Through a thorough understanding of trust law, the Law of Property Act, and the jurisdiction available under TOLATA, we were able to bring the legal position into alignment with the equitable reality — and secure a court order that protected our client’s position in full.
It is precisely in cases like these that deep technical knowledge, applied with creativity and precision, makes the difference between an avoidable tax charge and a just outcome.
Finawis Advisors specialises in estate planning, probate, and inheritance tax solutions for UK and international clients. To discuss how we can assist with your estate planning needs, visit us at facebook.com/FinawisAdvisors.
Beneficial Ownership, Resulting Trusts, and UK Inheritance Tax: A Case Study in Cross-Border Estate Planning
By Pavan Nagori, Finawis Advisors
