My client is a surviving spouse, husband having died intestate in 1969. Under the then intestacy rules, part of the estate was left to my client on a Life Interest with the remainder to their two children. Estate duty was paid at the time.
On reading HMRC’s tax manual IHTM04451, I believe that the value of the Life Interest Trust will be exempt from Inheritance Tax on my client’s death, by warrant of Sch. 6, para. 2 of IHTA 1984.
What I am less clear on is the position where the Life Tenant no longer wants the LIT, and the trust fund is advanced to the remaindermen. Under a ‘normal’ IPDI, this would be deemed a PET from the Life Tenant. But, does the Sch. 6 relief apply here?
My gut feeling is that it wouldn’t apply, but it is difficult to find any commentary on anything related to Estate Duty - any guidance would be greatly appreciated.