PTP's Tax Tip No.10 - Estate for IHT purposes

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Q: My client has asked me to review his IHT exposure. His home is worth about 300,000 pounds and he has other chargeable assets totalling roughly 100,000 pounds. He tells me that his life insurance (0.5 million pounds) policy has been nominated to his children. He is divorced. There don't seem to be any obvious IHT savings to be made. Am I right?

A: No you are not! The life policy proceeds will give rise to avoidable IHT on his death of 200,000 pounds Standard IHT planning advice is to ensure that life and pension policy proceeds are written in trust. But there has to be a proper trust declaration. Here, the client has merely nominated his children as the payees of the policy proceeds and this does not constitute a formal trust. He needs to effect a proper trust declaration if the proceeds...

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