Filling form 205

[marie48]

Need some advice regarding filling form 205. They set up a property trust during their life time, I do not know how to answer the following questions. Pl can somebody offer some guidance?

3 Assets held in trust for the benefit of the deceased during their lifetime ( 50% of property in will trust) Is it yes or no. Yes on second death

4 Did the deceased have the right to receive the benefit from any assets held in a trust that were treated as part of their estate for Inheritance Tax purposes .Yes
Immediate post death interest.

Assets held in trust for the benefit of the deceased x 9.3 £150,000
what assets were in the trust, the name of the person
who set up the trust and the date it was set up, I honestly do not know how to answer this question as it was created in a will. Do I put the date the wills were created and the value of his half share of the property.

7 Did the deceased have any kind of pension arrangement other than the State Pension? Not sure as he has NHS pension.

Is the full value of the house or half of the house e.g house is worth 300k as tenants in common, do I put 150k half the share of the deceased.
Whilst filling the form online, it seems that the half share of the property is added twice first property held in trust £150,000 on first death and then half share of the house £150000. I thought only his half share will be counted towards the estate £150,000 as the other 50% went into a trust for the benefits of the adult children. Apologies if this is not clear getting in a muddle trying to understand the forms. Or is it if a will trust is created then the whole property is counted as belonging to the deceased? Thanks

[AGoodman]

You are going to have to be a lot more specific in your facts and question. In particular, you seem to be talking about two separate trusts - a lifetime trust and a will trust

Who has died now (who is the IHT205 for)?
Who are "they"?
What sort of trust did "they" set up during their lifetime and when was it set up?
Could or did "they" benefit from the property in the lifetime trust- either living in it or receiving rent?
Who's death established the will trust? How were they related to the person who has died now?
What assets were in the will trust and who benefitted from it?
How many properties are there?


Generally speaking a will trust is established by the deceased on the date of their death.
An NHS pension is not the state pension. It will need to be mentioned.

[marie48]

IHT 205 on death of second spouse. It's a will trust coming into force on first death allowing the surviving house to live there but 50% of his share was placed in a trust for his adult children. The trust ends on both death. The adult children will only inherit on both dead. It is known as immediate post death interest. If I understand correctly the 50% placed into a trust will also be forming part of her estate. The whole value of the house is approx £300,000 and will be liable for iht. I just want confirmation whether the whole value of the house or 50% of it need to be declared. Are assets placed in a trust counted as if they belong to the decease? Thanks

[AGoodman]

"IHT 205 on death of second spouse. It's a will trust coming into force on first death allowing the surviving [sp]ouse to live there"

Understood

"but 50% of his share was placed in a trust for his adult children"

Do you mean that the first to die owned half the house and, under their will, left it in trust for the survivor for life and then for the adult children?

"The trust ends on both death. The adult children will only inherit on both dead. It is known as immediate post death interest."

Gotcha

If I understand correctly the 50% placed into a trust will also be forming part of her estate. The whole value of the house is approx £300,000 and will be liable for iht. I just want confirmation whether the whole value of the house or 50% of it need to be declared. Are assets placed in a trust counted as if they belong to the decease? Thanks

Yes, if i've understood correctly, the second spouse owned 50% outright and had a right to occupy the other 50% under the will trust. In that case, both parts are subject to IHT. The trust assets of an IPDI are treated as part of the beneficiary's estate.

[marie48]

Yes, if i've understood correctly, the second spouse owned 50% outright and had a right to occupy the other 50% under the will trust. In that case, both parts are subject to IHT. The trust assets of an IPDI are treated as part of the beneficiary's estate.

Understood but if first spouse has given his 50% directly to his adult children then the second spouse executor needs only to include £150,000 instead of £300,000.Doing a practice filling form 205 and the excepted estate came to £425,000. In that case the executor should be able to apply for residential nil band rate at £175,000. I understand immediate death post interest qualifies if it is passed directly to the descendant. Thanks a lot for taking time to answer my post. Very much appreciated.