Couple of iheritance tax questions - Life insurance

sam_r2d2

Morning Everyone

I'll spare the details, just got a few quick questions -

1. Life insurance paying out early - if somebody had an estate just under the NRB and then had a life insurance policy for 60k paying out before death due to a terminal illness, would it form part of the estate for IHT purposes after they died?

2. Life insurance trusts - Can you put a life insurance policy in a trust after it has been taken out or did it need to be done at the time of taking it out? if so is it possible to have half of the value placed in trust and half paid out early?

3. Does paying for a wedding/holidays count as a gift according to HMRC - I'm aware that you can give 5k as a wedding "gift" but is it possible to pay for everything themselves (e.g venue,cake honeymoon etc etc, as a lot of parents do) and not have it count as a gift for IHT purposes?

Thanks for any advice

xylophone

You (or the executor, if different), will need to check with HMRC but as far as I can see, if the money was paid to the deceased before he died and was in his possession, then the money formed part of his estate.

It might be possible for an old policy to be written into trust but it would need to be the proposer (person who took out the policy) to discuss with the insurance company and as far as I can see, the half and half arrangement you mention would be a non starter.

With regard to gifts, the paying of the bills for food and venue would count as the parents' expenditure I should think but the holiday seems more akin to a gift?

And as regards IHT, was the deceased married?

https://www.gov.uk/inheritance-tax/leaving-assets-spouse-civil-partner