Commentary

I4.414 Variations creating short term trusts

IHT, trusts and estates

I4.414 Variations creating short term trusts

I4.414 Variations creating short term trusts

Where a variation which satisfies the conditions in IHTA 1984, s 142(1) results in property being held in trust for a person for a period which ends not more than two years after a death, the dispositions of property which take effect at the end of the period are treated as having had effect from the beginning of the period1.

HMRC takes this to mean that the short-term interest is disregarded and tax is charged on the death as if the interest having effect at the end of the period had effect from the date of death2.

It follows from this that if the variation brings to an end a qualifying interest in possession (see I5.201) no notional transfer of value is treated as having been made under IHTA 1984, s 52(1). It also means that the fact that someone has enjoyed the benefits of an interest in possession, for

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