A retired couple’s inheritance tax planning was very nearly scuppered by a drafting error in a deed by which they intended to transfer their substantial home to their son and daughter-in-law. The couple’s plans were jeopardised by the omission of the single word ‘house’ from the deed and were only saved by the intervention of a judge who agreed to rectify the mistake.
The deed had been prepared with some urgency prior to the 1998 budget which it was feared would have adverse tax implications. The couple’s son and daughter-in-law moved into the property and spent substantial sums on its refurbishment before an ambiguity in the deed was discovered in 2011. It emerged that, due to the omission of the single word, the deed had not been effective in transferring the house itself but only the fields around it.
Rectifying the deed – which was described in court as ‘not a drafting masterpiece’ – Judge Jonathan Gaunt QC said it was clear that the couple had wanted to gift the entire estate to their son and daughter-in-law. He ruled: “That was their intention; it continued to be their intention up to the date of the exchange. The document did not carry out the conveyancing as it was supposed to do and they are entitled to a decree of rectification.”
The judge approved the application for the deed to be rectified.