Hi all, I’ve got a case where the deceased had a life interest in his late mother’s property (IPDI) and upon his death the remaindermen was the deceased and his 2 brothers (and if any predeceased, then to pass their share to their children). So my deceased has a vested interest in 1/3 of the property as remaindermen. As it’s an IPDI I know it aggregates to his estate but do I also declare 1/3 share of the capital interest? I’ve not come across this before - it just seems unfair to include the same asset twice.
IHT is not payable paid both on the entire property within the trust and also on the one-third within the deceased life tenant’s estate.
There may be two ways of reporting:
- the personal representatives (PRs) disclose a one-third interest in the property as an asset of the estate, and the trustees the two-thirds in which the life tenant did not have an interest in remainder, or
- the trustees declare the entirety of the property and the PRs omit any reference to the one-third to which the deceased life tenant is entitled as remainderman.
I am inclined towards the second option on the basis that immediately before the death the life interest was over the whole property and the interest in remainder was IHT exempt.
However, if s.18 IHTA 1984 exemption applies to the life tenant’s estate, adoption of the first option should help ensure that any IHT liability is correctly allocated.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
The deceased’s estate includes the IPDI but the remainder1/3rd interest is excluded property and thus forms no part of the deceased’s chargeable estate [IHTA 1984 ss47/48 and 5(1)(b)].
Hence there is no double IHT charge.
Malcolm Finney