Gifts With Reservation of Benefits

Trusts Discussion
1

A similar posting to this was made a while ago and it would appear that there wasn’t a definitive answer at the time.

I need to understand what the potential IHT position is should the donee predecease the donor where there is a gift with reservation.

  1. Is it part of the donee’s estate for IHT?
  2. If the donee’s Will passes the asset to another individual will the gift with reservation continue? and
  3. Is further IHT payable on value of the property when donor dies?

Any thoughts would be much appreciated.

2
  1. Yes
  2. It all depends whether the donor continues to benefit. The death of the donee doesn’t change this.
  3. Yes, by default. There may be quick succession relief or similar but i’ve never had to look at it.
3

I agree with Andrew.

Although a donor may continue to benefit from the gifted property thus giving rise on the donor’s part to a reservation of benefit (and an IHT charge on death) this does not alter the fact that the donor has made a gift to the donee and thus the gifted property forms part of the donee’s estate for IHT.

Note also that on the death of the donor, no CGT uplift occurs.

Malcolm Finney