My client is looking to buy a family income benefit (FIB) policy. FIBs provide regular tax-free income to beneficiaries when the holder passes away or when they are diagnosed with a terminal illness.
Our client does not currently have a partner so the beneficiaries of the policy would only be his three children.
He has no drawdown or income rights during his lifetime. The policy only becomes activated when one of the two events described above come to pass.
How will this policy be treated for IHT purposes? Will it form part of our client’s estate and if so will it be valued on the basis of the amounts being paid out the amounts paid in or both combined?
Query 20 513– Planner.
Payments might be chargeable lifetime transfers covered by nil rate band.
Inheritance tax (IHT) is complex. But I think...
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