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IHT on death benefits

07 November 2007
Issue: 4133 / Categories: Forum & Feedback

The inheritance tax calculations required on a discretionary trust

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Our client died in November 2004. His will created a discretionary trust. The only assets passing into the trust were the lump sum death benefits paid at the pension trustees' discretion from two approved pension schemes of which he had become a member in July 1988 and March 2000 respectively. No inheritance tax (IHT) was payable when these lump sums were paid to the trustees of the will trust. We are aware that for IHT purposes the two funds within the will trust constitute two separate settlements which commenced when our client became a pension scheme member. He had made no chargeable transfers in the seven years before becoming a member of each pension scheme.


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