Quick succession relief meaning

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

Variations and other post-death rearrangements Although beneficiaries cannot, in truth, amend the terms of a testator’s Will or the rules that apply on intestacy, those who stand to inherit under the Will or intestacy may enter into an instrument or deed of variation (sometimes called a deed of family arrangement), or use another post-death rearrangement, to change the practical effect of the Will or intestacy. By using a variation, an original beneficiary can stipulate that any property which, under the Will or intestacy provisions, would otherwise pass to them should instead be redirected to another person or persons. Other common forms of post-death rearrangement include: disclaimers distributions pursuant to precatory trusts distributions from Will trusts claims under the Inheritance (Provision for Family and Dependants) Act 1975 (I(PFD)A 1975) Parties often prefer a variation or other formal rearrangement after the testator’s death, rather than the original beneficiary simply making a lifetime gift of the asset, because, subject to certain...

Quick succession relief (QSR), not to be mistaken for taper relief, applies where a transfer of value is subjected to a further inheritance tax (IHT) charge within five years of the original gift or chargeable transfer. Consider a case where someone receives a lifetime gift (or inherits on a death) in year one, with IHT settled at that time, and in year three that recipient dies still owning the asset so it falls into their taxable estate and IHT is again due. QSR provides relief against this second IHT bill, calculated by reference to the IHT paid on the earlier transfer and the interval between the two events. How the relief works and when it applies Relief for successive charges, also called QSR, is available when the value of a person’s estate has been increased by a chargeable transfer—whether made during life or on death—occurring not more than five years before their death. The IHT arising on death is reduced by a percentage of the IHT charged on...