Valuation of lifetime gifts from joint owners for IHT

Trusts Discussion
1

My client has passed away, leaving behind his wife.

In the three years before his death, he (and in some instances he and his wife) made the following gifts:

  1. Residential Property to his daughter (value £175,000). This property was in my client’s sole name.
  2. Gift of business park from both husband and wife to daughter and son (value £500,000).
  3. Gift of land to son from husband and wife (value £250,000).

The value in each instance is the full value. I need to declare the value of these failed PETs to the revenue as part of the IHT400. The full value of the gift at 1. is included in full.

My questions is - it as straightforward as stating that the deceased’s share of the gifts made at 2. and 3. above are half the full value?

2

As the assets gifted at 2 and 3 were owned by the husband and wife, s.161 IHTA 1984 applies – they are “related property”. In the circumstances, the value of each gift for IHT purposes will be the open market value of the assets gifted without any discount (i.e. 50% of the full value each).

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

3

Thank you Paul. Very much appreciated.