IHT - liability and burden Flashcards
Who generally pays IHT on an LCT during the testator’s lifetime?
The person in whom the assets vest (i.e recipient)
Trustees should pay using trust fund; if they do not, the donor becomes liable.
What happens if the donor elects to pay tax on a lifetime transfer?
Their loss is effectively ‘assets settled + IHT Liability’
Who is liable to pay IHT due for lifetime transfers following death?
The lifetime recipient
Assets in the deceased’s estate are not used to meet these IHT liabilities.
What occurs if the lifetime recipient does not pay IHT within 12 months of the end of the month of death?
The deceased’s PR will become liable
PR should retain funds in case this situation arises.
What may a taxable death estate contain?
Assets that are excluded from the succession estate:
- joint tenant property
- GROB
What is the general rule regarding IHT on the free estate?
IHT on the free estate is a general testamentary and administration expense
Deceased’s PRs are likely to pay this tax.
From where is IHT on the estate typically paid unless a contrary intention appears in the will?
From the residue
What must be specified for tax payable on lifetime transfers to be paid from the residue?
A clear direction must be provided - A general direction to pay ‘all tax’ usually refers to assets passing through the will, therefore will not be good enough.
NB can’t reduce tax liability - just shifts the burden
Who bears the burden of IHT on lifetime transfers?
The recipient/beneficiary
What is the liability of the surviving co-owner in joint tenant property regarding IHT?
They bear the burden of IHT
This applies to surviving co-owners after the death of one tenant.
Who is liable for IHT in the case of a statutory nomination?
The nominated beneficiary
Who bears the tax burden of a DMC?
Lifetime donee
Who is liable for IHT on trust assets?
The trustees
Who is responsible for the tax on a GROB?
The lifetime donee.
