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Relief for appointments from Will trusts

If a Will creates a relevant property trust (typically a discretionary trust) and within two years of death there is a distribution (or other event) which would otherwise have given rise to an exit charge because the property ceases to be relevant property, then:

1. •

   there is no exit charge, and

2. •

   the inheritance tax legislation has effect as if the Will provided for the distribution

IHTA 1984, s 144

Whilst most relevant property trusts are discretionary trusts, the rules can also apply to other forms of relevant property trust such as TBMs and 18–25 trusts. The key point is that an interest in possession cannot yet have arisen ― see below.

The relief gives a testator the opportunity to postpone decisions about how the estate is to be distributed by leaving it on a discretionary