IHTM35183 - Distribution from a relevant property trust settled by Will: what you should do if you receive a deed of appointment

If you receive a deed of appointment under a discretionary trust created by will and the taxpayers are claiming that IHTA84/S144 applies to the deed, you should refer the case to Service Technical Support (or Technical for complex cases) who will advise whether or not the provisions of IHTA84/S144 apply. Unlike instruments of variation, there is no need for an election.

You should not accept as valid a deed of appointment in favour of a beneficiary who was dead at the date of the appointment (whether or not the beneficiary survived the testator). This is particularly relevant where the appointment is in favour of a deceased spouse or civil partner and there is a Transferable Nil Rate Band claim on the survivor’s death.

A beneficiary’s right to benefit under a discretionary trust ends on their death. So, any appointment which claims to benefit a beneficiary after their death is not valid. This means that a claim that spouse or civil partner exemption applies on the first estate because of the terms of the appointment and the provisions of IHTA84/S144 is not valid when considering the amount of nil rate band available to be transferred to the survivor’s estate.

You should refer any cases where this view is not accepted to Technical.