If I make a gift and want to insure against dying within 7 years, I gather there is a life assurance where the cover decreases in line with the potential inheritance tax bill. Is it better to insure myself with the policy written in trust or should the recipient insure me? Any comments appreciated.
In message , stuart noble
john boyle wrote in message ...
In message , stuart noble writes
Then you need level term assurance for £200k x 7 years, with no decrease. Write the policy in trust for the recipient, this is easier than him insuring you.
The reason it doesnt decrease is because the rule says that any PETS are added into the estate in order to calculate IHT. Any IHT that would be payable on the PETs will decrease after year 3. But it also says that when applying the nil rate band (currently £263k) this is applied to PETs first. So in this case, as the PETs are less than the nil rate band there is not tax due on them and therefore there is no IHT to taper. Therefore, the whole £200k will be added back into your estate in full for 7 years. The Nil Rate Band is still available of course and is applied to the 'whole' estate.
Many thanks for the explanation. That's another part of the minefield navigated :-)
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