Life Policies: investigating form IHT403: procedure for a gift of an existing life policy
Where the deceased gifted an existing life policy during their lifetime (IHTM20211) you will first need to consider if:
- the policy was transferred to a taxable beneficiary, or
- the transfer was a failed PET or an immediately chargeable transfer
If the neither of these apply you do not need to take any further action as the transfer of the policy is an exempt transfer. But if either applies you will need to obtain:
- a letter from the insurance company stating the surrender value (IHTM20083) of the policy at the date of transfer, and
- a copy of the policy schedule
if these have not already been provided by the taxpayer or agent.
If the policy is a with-profits policy with a surrender value of £25,000 or more, or is not with-profits but the transfer was within 2 years of the death, then refer to the Actuarial Team for advice on the value. Otherwise you can accept the surrender value is the open market value. But you must always consider whether IHTA84/s167 applies (IHTM20241).