Commentary

I5.376 The death of the settlor—example

IHT, trusts and estates

I5.376 The death of the settlor—example

I5.376 The death of the settlor—example

On 1 April 2016 Sanjay settled £400,000 on discretionary trusts — the trustees paid the IHT.

He had made a CLT of £80,000 in 2013 and a PET of £90,000 in 2015. He had always used his annual exemptions.

In May 2018 the trustees advanced £100,000 gross to one of the beneficiaries.

In August 2018 Sanjay died.

Initial settlement (2016)

The 2013 CLT reduces the nil rate band to (325,000 – 80,000) = £245,000.

IHT is (£400,000 – £245,000) × 20% = £31,000

The initial value received by the trustees was therefore (400,000 – 31,000) = £369,000.

Exit charge (May 2018)

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