More Tax

Question 1

What is a GROB

Answer 1

• gifts asset but keeps a benefit (normally property lived in)

Question 2

What is the effect of a GROB?

Answer 2

Asset remains in the taxable estate

Question 3

Are DMCs part of the deceased’s taxable estate?

Answer 3

Yes

Question 4

What are included in the taxable estate?

Answer 4

• GWRB
• DMCs
• Stat nominations
• IIPs (some)

Question 5

What is included in the taxable estate for IIPs created before March 2006?

Answer 5

Included in the estate of the life tenant of the IIP’s estate.

Question 6

What is included in the taxable estate for IIPs created after March 2006?

Answer 6

• If the life tenant when the trust was created dies, the trust is in his estate.
• If the life tenant is someone other than the life tenant when the trust was created dies, the trust is not in his estate

Question 7

What if husband and wife have assets each which are worth more together than apart?

Answer 7

They’re valued at their combined value.

Question 8

What happens where property is held jointly (whether tenants in common or as joint tenants)

Answer 8

Given a discount of 10 - 15%

Question 9

Who is liable to IHT on LCTs?

Answer 9

The donee (trustees)

Question 10

What happens if the donor elects to pay tax on LCTs?

Answer 10

The gift will be grossed up as he is effectively paying the trustee’s tax for them.

Question 11

Who is liable to pay the tax on a failed PET

Answer 11

The recipient. If they don’t pay (12 months from end of month of D.o.D) the PRs become liable.

Question 12

Where is the IHT paid from on gifts that pass outside of the succession estate?

Answer 12

IHT on items such as joint tenancy property or GWROB are paid from the residue unless their is a contrary intention

Question 13

What are the special rules for who pays tax for assets that pass outside of the estate?

Answer 13

• joint property = surviving co-owner
• stat nominations = recipient
• DMCs = recipient
• trust assets = trustees
• GROB = recipient