PTE or Gift with Reservation

[stel]

Well over 7 years ago my in laws gave their property to one of their less affluent children, but continued to live in the property. This defeated their assumption that they had made a PTE, because at the time of the gift they were unaware of the “gift with reservation” stumbling block.

The parents have recently moved into sheltered housing and the recipient of the gift now wonders if this has modified the gift with reservation status.

If so, was the gift with reservation status of the property extinguished with the departure of the parents to sheltered housing, or is there a set period of time which must elapse before the property is no longer deemed a gift with reservation.

If eventually the gift with reservation status is extinguished, then does the PTE kick in at that time, or does the 7-year PTE term (which has already been met) start afresh.

Would it help resolve the situation if the recipient of the gifted property moved into the property.

[maths]

The original gift of the property comprised both a PET and a gift with reservation.

However, as the donor survived 7 years no IHT arises on the PET although the reservation remains.

Assuming the move into sheltered accommodation is permanent the reservation of benefit is released and this release is "deemed" to be a PET.

Should the donor survive 7 years from this release no IHT arises on their subsequent death. However, death within the 7 years precipitates an IHT charge (subject to nil rate band etc).

Moving into the gifted property does not change the above.