IPDI with charity in remainder - IHT


#1

The following question arises from Will instructions.

A testator leaves an IPDI to a life tenant and on their death then to a charity.

My understanding is that on the death of the testator the legacy does not benefit from any exemption. On the death of the life tenant the property in the trust forms part of the life tenant’s estate for IHT purposes but qualifies for the charity exemption, and:

  • there is no IHT to pay by the trustees; and,
  • the value of the trust property reduces the life tenant’s NRB as applied to their remaining estate.

Am I correct? Any comments would be welcome.

David Clarke
Scott Duff & Co Solicitors


(Paul Saunders) #2

The gift to charity following the death of the life tenant is exempt under s.23 IHTA 1984.

As an exempt transfer, it will not reduce the life tenant’s nil rate band.

Paul Saunders