IHT and conditional legacies

Trusts Discussion
1

I wonder if forum members could assist on this one, I am considering the IHT treatment of conditional legacies.

I am content where the condition is age then depending on the age of income vesting, the age of the beneficiary at death and the relationship to the deceased it will be:

  • relevant property
  • a BMT
  • an 18-25 trust; or
  • an IIP

but is this the same for a conditional legacy where it is a condition precedent rather than subsequent eg. £500,000 to daughter if she gets married. It can’t, therefore, vest until she satisfies the condition.

Presumably, it can’t be a BMT or 18-25 as there is no age of vesting therefore if the daughter is under the age of income vesting then it would be relevant property or over the age of vesting then an IIP?

Thank you in advance.

Rebecca

2

I suggest that until the daughter satisfies the condition the fund is merely residue charged with the payment of £500,000 at some, indefinite time in the future.

In which case, the income and any capital gains are those of the residuary beneficiaries. I do not see it as a trust, but a charge against the residuary beneficiary(s) entitlement, which the executors will likely retain as security for the payment if and when the daughter fulfils the condition. Is marriage in the offing, or is it unlikely?

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals