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Where Taxpayers and Advisers Meet

IPDI irevocable or revocable

Andrew01
Posts:26
Joined:Wed Aug 06, 2008 3:27 pm
IPDI irevocable or revocable

Postby Andrew01 » Wed Jun 08, 2022 12:28 pm

Hello Forum

Trust Y creates an immediate post-death interest/IPDI.
So has the potential to use the residential nil rate band/RNRB IHT allowance if available.
Is it important for the IPDI Asset to be irrevocable passed to a life tenant A so it can use the residential nil rate band?

It has just entered my thinking possibly if the IPDI was revocable and a life interest was not passed to a new life tenant immediately, the first life tenant A would also become a settlor of the Trust Y as well.

regards
Andrew

AGoodman
Posts:1449
Joined:Fri May 16, 2014 3:47 pm

Re: IPDI irevocable or revocable

Postby AGoodman » Thu Jun 09, 2022 7:14 pm

What do you mean by "or the IPDI Asset to be irrevocable passed to a life tenant A "

For it to be an IPDI, it has to be an immediate interest - i.e. A has to have an interest in possession (life interest) under the terms of the will.

The IPDI does not have to be irrevocable but if you revoke it, the RNRB may not be claimed on the second death.

Revoking the life interest would not normally make A a settlor of the trust.

AGoodman
Posts:1449
Joined:Fri May 16, 2014 3:47 pm

Re: IPDI irevocable or revocable

Postby AGoodman » Thu Jun 09, 2022 7:15 pm

Revoking the life interest would not normally make A a settlor of the trust...although it would be a deemed transfer of value by A and would make A susceptible to a deemed GROB.

Andrew01
Posts:26
Joined:Wed Aug 06, 2008 3:27 pm

Re: IPDI irevocable or revocable

Postby Andrew01 » Thu Jun 09, 2022 10:28 pm

Thank you for your answers A Goodman

What do you mean by "the IPDI Asset to be irrevocable passed to a life tenant A "

Asset was not a good choice of word should used the word property
Should have also included Will in my question.

A Will creates an IPDI/an Immediate post-death interest in possessions for the Life Tenant A in a property

"The IPDI does not have to be irrevocable but if you revoke it, the RNRB may not be claimed on the second death."
In your above sentence, I guess that this means if the life tenancy of A is revoked (A no longer lives at the property) and the Trust leaves the property to a direct descendant of A's, A's RNRB will not be available.
In other words, as A no longer has an IPDI life tenancy the property does not form part of their estate any longer.

What would the situation be if the life tenancy for beneficiary A was revoked (A no longer lives at the property so no GROB) and immediately beneficiary B was given a life tenancy.
The RNRB was claimed when A received the IPDI from the Will.

guessing is B a beneficiary of a settlor interested trust as the IPDI has been lost by the revoking A's IPDI and appointment to B?

Andrew01
Posts:26
Joined:Wed Aug 06, 2008 3:27 pm

Re: IPDI irevocable or revocable

Postby Andrew01 » Thu Jun 09, 2022 11:22 pm

In error
"I wrote guessing is B a beneficiary of a settlor interested trust as the IPDI has been lost by the revoking A's IPDI and appointment to B"
Ment to say
Guessing the property now forms part The Will Trust as relavant property and the IPDI chain has been lost by the revoking A's IPDI even though there was an immidiate granting of IIP to B.

Another senario
as original question, A has IPDI in the property so the property forms part of his esate
The Will Trust now appoints the propert out right to A, is the RNRB avaliable on A death if direct decndant inherits the property from A?


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