Tax treatment of successive life interest trusts

Trusts Discussion
1

Hi

I have just returned to work from maternity leave and my brain is somewhat foggy so I would be grateful for clarification on this point.

I am dealing with an estate in which A died in 1999 leaving his house to B absolutely. B entered into a deed of variation so that the house was held on a life interest for B and C. C died a year later. B has continued to reside in the property until her death in 2023.

Is it the case that the whole property will be treated as being held under an IIP and aggregated to B’s estate? My understanding is that where there are successive life interest trusts, it will fall into the RPR, so in this instance half of the house will be an IIP and the other half would have fallen into an RPR in 2000. Is this correct?

many thanks

2

Yes, if it was a joint life intertest to B and C, unless B and C were married to each other or in a civil partnership as, in that case, s.49D IHTA 1984 might apply.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals