What is a debt payable out of a trust asset?

The total value of any such debts should be included in box 10.3 of the IHT205 form. This only applies to estates where:

1. the deceased benefited from assets held in trust during his or her lifetime (see our guide “What are assets held in trust for the benefit of the deceased?”); and
2. where there is some form of debt that is payable out of those trust assets, such as a mortgage or loan.

For example, if the deceased benefited from an interest in possession trust by living in a property (which was a trust asset) rent free, any mortgage over that property must be declared. This is notwithstanding the fact that the mortgage will be in the name of the trustees, not the deceased.

Any valuations should be undertaken in conjunction with the trustees of the trust.

Like other debts, the total value will be deducted from the gross estate for inheritance tax purposes.