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I5.241 Death of a person entitled to a qualifying interest in possession (QIIP)

On the death of a person beneficially entitled to a QIIP (often called the 'life tenant') (see I5.203), IHT is charged as if the beneficiary were absolutely entitled to the underlying asset. In other words, the capital value is included in the value of his estate¹. This charge arises whether or not the QIIP terminates on the death of the person entitled to it. For the IHT charge on death see Division I4.1.

The operation of these rules does not affect the succession of the assets – the life tenant will not normally have any control over the ultimate destination of the trust fund.

A person's estate does not however include² an interest in a trust for bereaved minors³ or an 18–25 trust⁴ or an interest in possession which is not a qualifying one. In Hall⁵ the First-tier Tribunal decided that a right to reside in a property for life