rent-free home / iht?

[bsmith]

The deceased shared her home (owing 95%) with a friend. The property was inherited by her daughter, presumably to save IHT. The daughter, who lives abroad, will now allow the friend (elderly but in good health) to live in the property rent-free for life.
What are the formalities / is this a settlement with IHT to pay? The daughter would prefer an informal arrangement.

[AGoodman]

It wouldn't be a settlement provided it remains informal and the occupant is effectively there under licence or tenancy at will, which can be terminated on notice.

If there was a document or possibly a verbal confirmation that that she had the right to live there for life, that would be a tenancy for life which is a settlement.

It might be sensible to document the arrangement as an AST to avoid any inferences.

[AGoodman]

It wouldn't be a settlement provided it remains informal and the occupant is effectively there under licence or tenancy at will, which can be terminated on notice.

If there was a document or possibly a verbal confirmation that that she had the right to live there for life, that would be a tenancy for life which is a settlement.

It might be sensible to document the arrangement as an AST to avoid any inferences.

[maths]

Does the friend own the other 5%?

[bsmith]

Yes, the friend owns 5% but no income or money to buy the 95%.

[maths]

I would have thought the ownership of the 5% entitled the friend to occupy the property by virtue of her interest.