Life Interest Trust

[tiggybp]

Hi
My father died in 1986 and left his portfolio of shares (£327k) in trust to Cancer Research. However for the duration of my mothers life she was to be paid the dividends generated by the portfolio.
All other assets from my fathers estate were passed directly to my mother and I therefore assume 100% of his nil rate band is transferable.
My mother passed away last month and I'm now trying to understand how this will be treated in terms of IHT.
As the capital of the portfolio is now going to go directly to Cancer Research do I need to mention it in either IHT400 or IHT402?
If it does need to be detailed will it affect the nil rate band for my mothers estate which I had assumed would now be £650k?
Thanks in anticipation of your guidance and help.
Brian

[pqtaxation]

1) As the capital of the portfolio is now going to go directly to Cancer Research do I need to mention it in either IHT400 or IHT402?
2) (If it does need to be detailed) will it affect the nil rate band for my mothers estate which I had assumed would now be £650k

Yes to 1) and No to 2).

Mother had an interest in possession in the trust/settlement for her life and so its value needs to be included on IHT418.

As charity (remaindermen) is exempt (IHT 418 box 18 ) there is no effect on transferrable NRB from your father.

[maths]

pqtaxation

Think i agree with your comments.

For clarification:

1. The full NRB is transferable because the inter-spouse exemption applied on father's death irrespective of the charity dimension.

2. Whilst the iip is "qualifying" and thus included as part of mother's estate, it is reduced due to the charity exemption.

[tiggybp]

thanks for your help and advice guys