This guidance note explains the inheritance tax consequences of making an appointment from a Will set up in a trust within two years of the death. It also considers the capital gains tax consequences which are not the same as those of a deed of variation and care should be taken not to trigger an inadvertent capital gains tax liability.
If a Will creates a relevant property trust and within two years of death there is a distribution (or other event) which would otherwise have given rise to an exit charge because the property ceases to be relevant property, then:
there is no exit charge, and
the inheritance tax legislation has effect as if the Will provided for the distribution
IHTA 1984, s 144
Whilst most relevant property trusts are discretionary trusts, the rules can also apply to other forms of relevant property trust such as trusts for bereaved minors (see the Trusts for bereaved minors guidance note) and 18-25 trusts (see
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