Variation of Trust

I am dealing with a Will Trust, which was set up when the Testator died in 1992. In his Will he gave his property to his (2nd) wife, for life and thereafter to his son and grandsons. The wife died in May 2018.

We have completed the IHT400 for the wife’s estate and the property was included in the IHT418 in the Inheritance Tax form. There was no IHT payable, as the estate was below the excepted limit.

My queries are as follows:-

  1. If the property has been disclosed to HMRC in the IHT400, do I still need to complete an IHT100?
  2. Do the Trustees benefit from the automatic uplift to the date of death value (on wife’s death) for the purposes of assessing CGT?
  3. Is it possible to vary the Trust i.e. the percentage split between son and grandsons now that the wife has died, how would I do so and what are the IHT consequences of doing so?

Any guidance would be very much appreciated.

Martyn Dixon
Harold Bell Infields & Co.

In brief
a. There is no need to complete an IHT100 in these circumstances.
b. Yes.
c. No. The trust has ended. All the beneficiaries can do is make a transfer of the trust property they have become entitled to, with appropriate tax consequences.

Paul Davies
Clarke Willmott LLP

Dear Paul

Thank you for your comments. I was of the same opinion on all three points, but it is nice to see that someone else shares the same view(s).

Kind regards.

Martyn Dixon
Harold Bell Infields & Co