A gift with reservation of benefit (GWROB) is where a person has made a gift during their lifetime but has retained some use or enjoyment of the property gifted. Most commonly, this will be a property that the donor continues to live in. There are tax rules that apply to treat the estate as if the gift had not been made, such that the value has to be taken into account when calculating any inheritance tax payable on death. But having calculated that tax, who has to actually pay it?
The liability for inheritance tax (IHT) on a GWROB depends on whether the gift is treated as a potentially exempt transfer (PET) or as part of the death estate.
If you are administering an Estate with a Gift With Reservation of Benefit within it, it is recommended that professional advice be taken as it is possible for the Executors, Personal Representative or Trustees to become personally liable for any unpaid Inheritance Tax.
If you found this article helpful we would recommend reading, ‘Trust Changes: Inheritance Tax‘.Talk to our legal team
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