Giving up the right to benefit from assets held in trust

This will affect only a small minority of estates. If trusts were or are involved, you may wish to consider seeking professional legal advice.

Treated as a lifetime transfer

Giving up the right to trust assets during the deceased’s lifetime is treated as lifetime transfer, just like big gifts made within seven years of death. This is part of the “7 year rule” for inheritance tax.

However, just like gifts of money and property, this sort of transfer is also subject to a long list of exemptions. So, for example, if the trust assets in question were worth less than £3,000, they may be covered by the deceased’s annual exemption, and do not have to be declared.

“Giving up” can manifest itself in different ways, but it essentially means that the deceased was the beneficiary of a trust, and decided at some point to stop receiving any benefit from the trust. For example, if he or she lived rent free in a house which was a trust asset and then decided to buy and live in another property. The benefit of the trust would then have been transferred to someone else, and this is why it is considered a kind of transfer.

For a detailed description of the exemptions and the application of the seven year rule, see our guide “gifts made within seven years of death”.

And for examples of trusts, see our guide “What are assets held in trust for the benefit of the deceased?”.