If the settlor dies within 7 years of the transfer which
created the interest in possession, there is a failed PET (
IHTM04057) and the transfer becomes
taxable on the settlor’s death.
But if the life tenant dies before the settlor, during that
7-year period, and the trust property reverts to the settlor, it
will again be taxable as part of his death estate. So the same
property is subject to tax twice on the settlor’s death.
In these circumstances, see the Double Charges Relief
guidance at
IHTM14691.
Where the transfer creating the interest in possession is
made on or after 22 March 2006, this will only be relevant if:
