Lifetime transfers: gifts with reservation (GWRs): insurance policies: general gifts after 18 March 1986
When a donor takes out a policy for another person, the date of gift is the date on which they make the contract of insurance with the company.
Mr Sharp applies for a pure endowment and a term assurance policy (IHTM20421) on 1 March 1986. At the same time he completes a declaration of trust under which the term assurance policy will be held in trust for his children. The trustees have a power enabling them to appoint in his favour. With his application he encloses a cheque for the premiums due under the policies.
On 16 March the insurance company posts a letter to Mr Sharp advising him that his application has been accepted and that the policies will be issued in due course. The policies are prepared on 1 April 1986 and posted the following day. He dies on 1 December 1990.
The date of gift is the date on which the contract of insurance is made. The contract is made when one party to it has unconditionally accepted an offer or counter offer from the other and notified him or her to that effect.
In this case notification was posted on 16 March and therefore this is the date on which the contract was made and the gift completed. So, although there is a reservation, as the gift was completed before 18 March 1986 it is not caught by the GWR rules. Had the acceptance been conditional (for example, on payment of the premiums) the contract would not have been concluded until the condition was satisfied.