188ÌåÓý

When a settlor makes a transfer into a discretionary or a non-qualifying interest in possession (IIP) trust or a special trust (other than a disabled person’s interest), that is an immediately chargeable transfer and the transfer is chargeable to inheritance tax (on the ‘loss to the estate� basis) at lifetime rates as set out from IHTM14531.

If the settlor dies within 7 years of making the transfer, you must consider additional charges on the lifetime transfer. (IHTM14571)

Gift with Reservation (GWR)

If the settlor retains an interest in a discretionary settlement as a potential beneficiary, they retain a benefit in the gifted property. This is a GWR and may be included in the settlor’s estate on death. (IHTM42254)

Foreign Trustees

A living settlor may be held liable for trust charges if the trustees are resident abroad and do not pay any tax that is due (IHTA/S201(d)).