Assets held within an Interest in Possession Trust are treated for Inheritance Tax purposes as if they belong to the Life Tenant. Life Tenant the beneficiary entitled to receive lifetime benefits from a Trust. This provides that the rights under the insurance contract are treated as pre 22 March 2006 and if the premium payment is a transfer of value then it will be a PET. This will bring the trust into the relevant property regime. Life Interests and Rights of Occupation - Wards Solicitors For example, it may allow them to live rent free in a residential property owned by the trust. This encompasses not only the composition of portfolios, but also their tax-efficiency and associated administrative costs. Indeed, an IIP frequently exist in assets that do not produce income. Trust income paid directly to the beneficiary will be taxed at their rates. This could be in favour of Sallys cousin, who will have a revocable life interest. For completeness, note that a PET can arise on or after 22 March 2006, for lifetime gifts into a bereaved minor's trust on the coming to an end of an IPDI. FLITs are essentially a life interest for a person (usually the surviving spouse), with an underlying discretionary trust that will arise when the surviving spouse dies. When a chargeable event occurs any gain will be assessed to income tax on: * The liability remains with the settlor throughout the tax year of their death. In the case of life interest trusts where different beneficiaries are entitled to income or capital they will need to act fairly between the different classes. This element requires third party cookies to be enabled. What are FLITs. Once the trust is created the trustees will be the legal owners of any trust assets and investments. This remains the case provided there is no change to the IIP beneficiary. Instead, the value of the trust will form part of the life tenant's taxable estate on their death. The life tenant only has an automatic entitlement to trust income and not capital. Will payments be treated as 'same-day additions' under IHTA 1984, s 62A, for the purpose of calculating ongoing IHT charges on pilot trusts, where an employee is a member of a contractual contributory pension scheme and that employee has requested that the administrators divide funds to several pilot trusts set up by that employee on different days during his lifetime so that the total funds in each pilot trust remains under the IHT nil rate band?
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