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Without altering the trusts

The provisions of IHTA84/S86(1) require that the settled property be held on trusts ‘which do not permit any of the settled property to be applied for the benefit of� anyone other than the persons described in sub-paragraphs (a) and (b).

So if the trustees can allow a non-qualifying beneficiary to receive some benefit under the trust, without either altering the trusts or exercising a power of appointment by deed, the provisions are infringed and IHTA84/S86 will not apply.

Examples of this would be where the trustees can:

• make a loan at less than a commercial rate of interest to the company or
• allow any person to occupy trust property rent-free.

But providing interest free loans or rent-free occupation for employees who are qualifying beneficiaries would not infringe the provisions, unless the employee is also a participator in which case there will be a charge under IHTA84/S72(2)(b) - see IHTM42982.

Legal personal representatives

If the deceased’s legal personal representatives (LPRs) are included within the definition of the class of beneficiaries this will infringe IHTA84/S86. This is because the LPRs would have to distribute the funds in question according to the deceased’s Will or intestacy. So, the recipients would not necessarily be qualifying beneficiaries.