I have been asked by a family to help unravel a mess involving a lifetime trust.
Dad settled his family home into a lifetime trust in 2020. The value of the home back then was £450,000 (no lifetime IHT was paid nor IHT100 for some reason and we’re going to have to rectify that). Dad died this year.
The settlement provides that the Dad should have the benefit of the property for life and then, after his death, the benefit should transfer to his wife. The Dad’s Will states that the residue of the estate passes to the wife. For ease of example, let’s assume Dad’s estate is the home (£500,000) and some cash totalling £550,000.
Obviously settling the home into the lifetime trust is a GROB. We are not sure whether or not there will a liability to IHT because our understanding is s49 won’t apply here because although the wife is named as the principal beneficiary of the settlement now that Dad has died, that doesn’t constitute an IPDI? Therefore, if the home has effectively passed to a lifetime trust rather than the spouse (being an exempt beneficiary) there will be IHT to pay?
If that is the case, I can’t see that a s144 appointment or a s142 variation can help here?
TIA