Frequently asked questions

If a Will establishes a nil rate band DWT with the balance of the deceased’s estate being held on an immediate post death interest (IPDI) for the surviving spouse, will the IPDI be treated as a “related settlement” (as per IHTA84/s.62) for the purpose of calculating any 10 year anniversary (TYA) or Exit charge that falls due on the DWT?

Where a Will establishes two (or more) settlements these will normally be related by virtue of the fact that they both commence on the day of death. However, there is an important exception to the general application of the IHTA84/s.62 provisions that arises where one of the settlements creates IPDI for the testator’s surviving spouse (or registered civil partner). In such circumstances IHTA84/s.80 provides that the settlement conferring the IPDI begins on the terminationof that spouse’s interest in possession and so is not treated as a related settlement for the purpose of calculating TYA and / or Exit charges on the DWT of the first spouse to die (original testator).

However, it must be remembered that because the surviving spouse is treated as creating the settlement, when her / his interest terminates – typically, but not necessarily always, on their death - this may then be related with any other settlement created in her / his Will (but not with any other settlement created in the Will of the original deceased testator).