The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
In thecontext of a disposition by Will, a residuary gift is a gift of a share of what is left of thefree estate after liabilities, expenses and specific gifts have been paid. See theIncidence of tax on specific gifts guidance note. If there are no specific gifts, thewhole estate is comprised of one or more residuary gifts. In thecontext of intestacy, where thedeceased was survived by a spouse or civil partner, theresidue is thebalance of theestate after deducting thechattels and statutory legacy. See theIntestacy guidance note.
The features described in this guidance note apply to a gift of residue of thefree estate. They do not generally arise in other components of thedeath estate, such as joint property or gifts with reservation. The transfer of settled property in which thedeceased had a qualifying interest in possession could be divided into specific gifts and residue and similar considerations apply. However, residuary gifts of settled property do not normally bear theburden of tax on thespecific gift element.
This guidance note explains when and how inheritance tax is attributed to residuary gifts.
The persons liable to pay inheritance tax on a transfer of value on death are those in whom theproperty vests. Property in thefree estate vests in thepersonal representatives. Property in a settlement vests in thetrustees of thesettlement.
Where theproperty vests in thePRs and theproperty is in theUK, thetax is treated as a general testamentary expense of theestate subject to any contrary intention shown by thedeceased in his Will.
So thegeneral rule is that tax is a testamentary expense, which is paid out of residue. The tax on specific gifts is borne by residue unless:
the gifts are required by theterms of theWill to bear
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