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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Trust created by a variation: introduction

It is perfectly acceptable for a variation to set up a trust, both an interest in possession trust (IHTM16061) or a discretionary trust (IHTM42000). With the former it is important to make sure that the trust period ends more than two years after the death. Where it does so and all the other conditions under IHTA84/S142 are met, there is usually no problem in accepting that the IoV falls within the terms of IHTA84/S142. There are separate instructions that tell you what to do if the

  • trust period ends within two years of the death (IHTM35133), or
  • trust is for the benefit of the surviving spouse or civil partner (IHTM11032) and ends shortly after the two yearperiod (IHTM35095).

Where the variation sets up a discretionary trust, again if all the other conditions under IHTA84/S142 are met, there is usually no problem in accepting that the IoV falls within the terms of IHTA84/S142. Note that any appointment from the trust (IHTM35085) under IHTA84/S144 does not infringe rule that the same property may not be redirected more than once.