IHT - Included or excluded in IHT calculations

Sorry for a simple question, but… For any client where their total estate exceeds the allowance of £1m assuming married and able to pass the RNRB, if they have funds in simple Trusts outside the Will, ie Life assurances or Pensions in bare trusts, should that be included in the calculation or can we ignore it? Cheers - Chris (Rugby Wills)

Hi Chris,

Pensions are typically held by the trustees on discretionary trusts, and do not form part of the estate for IHT.

98% of cases I see - no IHT - however

Life insurance in absolute or discretionary trust may be subject to IHT and the premiums may be PETs if high and not covered by annual exemption or surplus income.

It may depend if the trust was taken out at outset or placed in trust at a later date. And if either took place when the settlor was not in good health.

Each case is different.


Thanks for the reply @Bish :+1:

1 Like