Mother wants to create a s89 trust for her disabled daughter . Mother is elderly and insurance against risk of dying within 7 years is not an option. How is IHT dependent relative relief claimed, or is it a matter of waiting for seven years and if the mother dies within that time, claiming the relief at that time? Ideally, mother wants to know now, as other lifetime gifts are anticipated.
Hodge Jones & Allen
There appears to be no reason to report the disposition as it is not a transfer of value assuming of course the s11 conditions are satisfied. No formal claim is necessary.
Interestingly regarding the “normal expenditure out of income” exemption HMRC appear to still require disclosure [see IHT Manual para 10652]. However, there seems nothing similar re s11 dispositions.
Should death occur within 7 years no doubt at that point HMRC may inquire as to whether s11 was satisfied and evidence to support satisfying s11 would then need to be produced.