IHTM17053 - Payments forming part of death estate: death benefits payable at discretion of trustees

Where the trustees have discretion ( IHTM17123) as regards payment of death benefits ( IHTM17030) (so that they can choose whom to pay the death benefits to) then the death benefits do not form part of the deceased’s estate for IHT. This applies even where the trustees have a discretion over the payment and exercise that discretion in favour of the deceased’s estate - the lump sum death benefit is not liable to IHT.

In these cases the personal representatives should state at page 2, boxes 11 to 15, of the form IHT409 ( IHTM10033)

• the name of the pension scheme or title of the personal pension policy
• whether the scheme/policy is approved ( IHTM17001) for income tax purposes
• the name of the person who received the lump sum payment
• say that the payment was made at the trustee’s discretion (they may also provide some evidence of this, such as a copy of that part of the scheme rules or a letter from the insurance company)

and

• not include the amount of the lump sum in either box 15 or the IHT400 ( IHTM10021).