Readers’ forum: How can clients avoid paying large inheritance tax bill immediately?

A brother and sister are equally entitled to the residue of their parents’ estate. This includes a property worth around £2.7m with an equity release loan currently owed £1.1m. Inheritance tax of £350 000 has been deferred under the instalment option for property. The sister would like to keep the property and the brother would like to sell. The sister is working out options for settling with her brother.

IHTA 1984 s 227(4) requires that where there is a partial sale of a property subject to payment of IHT by instalments the proportionate part of the tax will be payable immediately. However is the property really being sold? Is there an argument that the daughter is lending funds to the estate to settle the son’s share of the property and she will then take on the existing debt and the property in return for the...