Life Assurance Trusts


(Sally-Ann Joseph) #1

I would be grateful for assistance as I have not dealt with many of these.

If the sum payable on death is less than nil rate band, I am assuming that there will be no need to file an IHT100 on 10 year anniversary’s or if over NRB and settlor still in good health?

If after death and payment made to trustees who loan the funds to a beneficiary will there still be a charge on the 10 year anniversary even though there are no funds to pay the charge?

Sally-Ann Joseph
QS Rose & Rose


(andrew.goodman) #2

Strictly speaking I believe the obligation to file a return arises if the aggregate transfer (ie trust fund plus chargeable transfers made in the seven years preceding the creation of the trust) is greater than 80% of the nil rate band.

The regulations are here:

Regulations

You can usually treat term insurance as of negligible value if the life is in good health. If this is a whole life policy, you should also check whether the policy has a realisation or transfer value.

And yes, if the trustees have assets (the sum owed by the beneficiary), there is value in the trust and there could still be a charge. The trustees would need to part recover the loan to enable them to pay any tax.

Andrew Goodman
Osborne Clarke LLP