What is the inheritance tax (IHT) treatment of the bare trust?
For protection policies only. This information is for intermediaries only. It mustn't be distributed to, or relied on by, customers.14 January 2019 Back to results
A bare trust is a simple trust, which can be used when the person creating the trust is sure about who they want their beneficiaries to be.
The payments to maintain the policy may be covered by an exemption such as the £3,000 yearly exemption or normal expenditure out of income exemption. To the extent that they aren’t exempt, they will be potentially exempt transfers.
The beneficiaries have the trust fund value within their IHT estates. If one of the beneficiaries dies, their share of the trust fund passes in accordance with the terms of their will or the intestacy rules.
To find out more about trusts, potentially exempt transfers and IHT, please go to gov.uk(Opens new window)
This information is based on our understanding of current taxation law and HM Revenue & Customs (HMRC) practice, which may change.
Trusts establish legal rights and entitlements and might have material financial and tax implications for the settlor, trustees and beneficiaries. Aegon UK isn't authorised to provide legal advice, so you should take your own legal advice before setting up a trust, to make sure that it meets your clients' requirements. Our trusts have been drafted for use by UK domiciled individuals.