Q&As

A life tenant under a pre-2006 interest in possession trust has died and the terms of the trust then became a relevant property trust for the remainder of the 80-year trust period, with the ultimate remainder at the end of the trust period being such charities as the trustees shall decide. If the trustees exercise their discretionary power of appointment, how is the inheritance tax charge calculated?

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Published on LexisPSL on 09/08/2019

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  • A life tenant under a pre-2006 interest in possession trust has died and the terms of the trust then became a relevant property trust for the remainder of the 80-year trust period, with the ultimate remainder at the end of the trust period being such charities as the trustees shall decide. If the trustees exercise their discretionary power of appointment, how is the inheritance tax charge calculated?

The death of the life tenant would have created an inheritance tax (IHT) liability by virtue of section 49 of the Inheritance Tax Act 1984 (IHTA 1984) (subject to any property which was eligible for relief).

On the death of the life tenant, the settlement would have become a relevant property settlement, which would be subject to the usual IHT periodic charging rules and the charge to IHT when property ceases to be relevant property. However

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