Lifetime transfers: loss to estate less than value of property given
- remains part of the deceased’s estate, (IHTM04029)
- includes excluded property, (IHTM04251) or
- if the transferee pays the expenses (other than any Inheritance Tax on the transfer) incurred by the transferor in making the transfer, IHTA84/S164.
Prior to 22 March 2006 if Ali had transferred £200,000 into a settlement where the trusts were for her for life with remainder over, the £200,000 would have remained part of Ali’s estate. This is because the transfer was to a ‘qualifying’ interest in possession settlement, so although there is a disposition, (IHTM04023) there is no loss to the estate and no transfer of value. (IHTM04024)
From 22 March 2006, the transfer would now be an immediately chargeable transfer because it would be a transfer to a relevant property trust, and in addition the gift with reservation provisions under FA86/S102 would also apply (IHTM14315).
Under the Will of Tamsin, property is settled on Seren for life with remainder to Ruby. Ruby gives the reversionary interest (IHTM16084) to Seren. The reversion is an item of property which has value. But it is excluded from the charge (IHTM04281) which is disregarded in considering whether the disposition has given rise to a loss to Ruby’s estate. The disposition is not a transfer of value.