I5.241 Death of a person entitled to a qualifying interest in possession (QIIP)
On the death of a person beneficially entitled to a QIIP (often called the 'life tenant') (see I5.203), IHT is charged as if the beneficiary were absolutely entitled to the underlying asset. In other words, the capital value is included in the value of his estate1. This charge arises whether or not the QIIP terminates on the death of the person entitled to it. For the IHT charge on death see Division I4.1.
The operation of these rules does not affect the succession of the assets — the life tenant will not normally have any control over the ultimate destination of the trust fund.
A person's estate does not however include2 an interest in a trust for bereaved minors3 or an 18–25 trust4 or an interest in possession which is not a qualifying one.
On the death of any person, tax is charged as if, immediately before his death, he had made a transfer of value and the value transferred by it had been equal to the value of his estate immediately before his death5.
The effect of these provisions is to subject the settled property to a deemed transfer of value. In contrast to lifetime terminations, the deemed transfer of value on death is not just of the settled property, but of the entire estate of the life tenant. The settled property will form an appropriate