Certificate of Chargeable Event

Dougdee

My Mother died at the beginning of January at the age of 98. She left a will and we, her three children that are also her executors, are in the process of claiming my late Fathers Nil Band Allowance prior to seeking a Grant of Probate.

I'm happy to say that my Parents had good advice during their lifetimes and, as a result, were advised to establish life policies that were trusts in order that the amount of IHT would be minimised since they would not form part of the estate. There are three policies of this type in all of which two have migrated from the original companies to Aviva. My Brother and Sister and I are the trustees and beneficiaries for these life policies.

I called Aviva intending to clarify the situation and found, in fact, that they were able to collect all the information over the phone and that by the end of the call I had made the claim on one of the policies. Today, about ten days later, I received a payment confirmation that they had paid into my personal current account the proceeds. I will be paying my Brother and Sister their shares.

Leaving aside the slight concern that the funds were paid directly to me ( I know I'm not going to rob my siblings) the other issue is that there is a Certificate of Chargeable Event for an amount that has been paid to HMRC. In a supporting Taxation Factsheet that was sent with the it talks about the possibility of paying an adjustment if you are a higher rate tax payer ( I am). I am concerned that even though my siblings are also trustees I may be landed with the income tax on their share. Is this a real problem or will I also have to somehow tell HMRC that they should chase my Brother and Sister for their tax liability.

Any help with this will be gratefully received.

Eek_Bears

We also had one of these. My understanding is that it’s a chargeable event for your Mum not you. Worst case scenario is you have to do a tax return for your mum and there may be something to pay if she was a higher rate tax payer.

Who’s name is on the certificate? 

Keep_pedalling

Eek_Bears said:

We also had one of these. My understanding is that it’s a chargeable event for your Mum not you. Worst case scenario is you have to do a tax return for your mum and there may be something to pay if she was a higher rate tax payer.

Who’s name is on the certificate? 

It’s more complicated than that.

https://www.canadalife.co.uk/technical-support/taxation-of-investment-bonds-when-held-under-trust/

Dougdee

The name on the certificate is my Mothers. Yes she was a higher rate tax payer.

So from the flow chart it appears that all the trustees will have to put their hands up for the tax. Thanks very much for the help.

Doug

Eek_Bears

Side question - how did you know the bond was held in trust? Was it obvious on the paperwork or did Aviva tell you during the claims process?

Dougdee

The statements of the bond said that it was a trust. However we did not know that another one was a trust until Aviva told us.

Eek_Bears

Ok thanks. I will have to call the insurer and ask about my mum’s.  

As an aside are you sure you’re the trustee if you didn’t know it was in trust? Does the insurer offer trustee services and perhaps you and your siblings are just beneficiaries?

Dougdee

For the ones where we knew about it we were listed as trustees. For the one where we didn't know they asked and I told them and they then confirmed.

Eek_Bears

Makes sense.

For anyone reading this in the future in the same situation as me (ie the bond not in a trust and the person who died not a higher rate tax payer) this is where I got my info

https://connect.avivab2b.co.uk/adviserPublicProductDocuments/IN13136?productCode=2098

SeniorSam

Not part of your question, so forgive me if you already know this, but I do hope that you were aware that excluding any gifts in excess of the gifting allowance, in addition to the Nil Rate Band allowance of both your parents (£325,000 each) if they were not divorced, there are also Residential allowances of of £175,000 each before inheritance tax is payable.