IHT & IIP & Overage

Client’s instructions are:

  1. carve out overage in main residence into inter vivos discretionary trust. If there is very little (if any) development potential at this stage are there any adverse IHT consequences? Main reason is not to mitigate IHT but rather to ensure beneficiaries of dwelling pay due regard to the the development potential when the property is sold. Would answer be any different if settlor was included in class of beneficiaries?

  2. A will that gives wife IIP in main residence for 3 years to allow her sufficient time to relocate as house would be too large for her to live alone. Presumably the IHT spouse exemption is available on death and when IIP comes to an end there would be a PET which may fall out of account if wife survived for a further 7 years.

Comments appreciated.

Simon Rounding
Elmhirst Parker LLP