Chapter: 2 - Inheritance Tax Mitigation: The Basics

A convenient recipient of lifetime gifts

2.3.1

Where a gift is to be made but either the donor wishes to ensure some protection and/or a suitable donee does not present himself, a trust can be a useful mechanism. Even if death follows within seven years, the value charged to IHT will be that prevailing at the date of the gift, not at the date of death, by when the asset(s) may have appreciated. The full range of exemptions and reliefs is available for transfers into trust as for other types of property. Note that, on termination of a qualifying or ‘estate’ interest in possession, use of the life tenant’s annual exemption(s) requires notice by the life tenant to the trustees (IHTA 1984 s57). The same point applies to the life tenant’s marriage exemption.