New queries, issue 4444

Wealthy widower

Can a death benefit be placed in trust to avoid inheritance tax?

Our client is very wealthy. He is a widower with significant assets and his estate will be liable to a serious amount of inheritance tax. Various steps including several potentially exempt transfers (PETs) have been taken to reduce it.

One of his remaining assets is an investment – a form of bond into which he still pays a monthly amount – that has a current surrender value of something over £120 000. He could surrender it at any time and take the money. In any event this investment will pay out on his death – a value very broadly equivalent to the surrender value.

It occurs to us to put the death benefit in trust for one of his children and our client is quite keen on this. What we...