S.144 IHTA and grandchild

Hi Forum,

If a testator (A) leaves their property on an IPDI trust for their spouse (B), and on B’s death the property passes to an adult child © and a grandchild (D) on reaching 25:

On B’s death (assuming A pre-deceased), if the trustees of the property trust appoint D’s share within two years of death to D (either on an IPDI or absolutely) can this appointment be read back under s. 144 and therefore A’s unused (T)RNRB claimed?

Thank you!

Owen Mason
Vermeylen Law

As there will be an intervening life interest, s.144 IHTA 1984 cannot apply to D’s entitlement under A’s will.

However, if A has not used their RNRB, it will be available on B’s death. If D is under 25 when B dies, depending upon the nature of their entitlement whilst under 25, they may not have a qualifying interest for the RNRB to apply to their share of the property. To ensure RNRB will apply to D’s interest, any appointment will need to be made during B’s lifetime (whether as a life interest or absolutely).

Paul Saunders

I agree with Paul, except that I believe D’s entitlement under the trust on B’s death has to be absolute to attract the RNRB/TRNRB.

If you are at a Will drafting stage, this can be covered by a clause restricting what D gets absolutely to the RNRB/TRNRB not used up by the gift to C, or under B’s Will-if perhaps he has in the meantime bought a house that is left to children/grandchildren.

It is not safe to leave this until after the death of A, in case B dies before any steps are taken to protect the RNRB/TRNRB.

Simon Northcott

Hi Paul

That is really helpful input: thank you so much for your time.

Best wishes


Owen Mason

Director and Solicitor

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As far I can see as long as D & C have an IPDI or vested interest on the death of B then the unused RNRB from A’s death and the RNRB from B’s death will be available and no appointment is necessary.

R Simpson
Thomas Simpson Solicitors

Thank you Simon – much appreciated,

Owen Mason
Vermeylen Law

I tend to agree with Paul and Simon.

S144 inapplicable due to iip of B [s144(1)].

The RNRB, as the trust stands, is available on B’s death as is the TNRB from A. However, it is restricted if C’s absolute interest is of a value lower than the combined RNRBs.

D’s interest I would have thought is a contingent interest and thus the RNRB is inapplicable to D’s interest. Even if a life interest were to be appointed to D such interest would not be a qualifying interest in possession. Thus, any appointment would need to be to D absolutely.

For RNRB purposes absolute inheritance is required unless any trust interest is an IPDI or one of the special trust types (eg BMT).

Malcolm Finney

Hi Malcolm

Thank you – much appreciated,

Owen Mason
Vermeylen Law