Inheritance Tax Act 1984 section 144

Distribution etc. from property settled by will

Section 144 deals with the inheritance tax treatment of property left on discretionary trusts by a person's will, where the trustees redistribute that property within two years of the death, allowing the redistribution to be treated as if it had been specified in the will itself.

• Where a will creates discretionary trusts and the trustees appoint or distribute the trust property within two years of the testator's death, the inheritance tax position is recalculated as though the will had originally directed the property to be held in the way resulting from the appointment.
• The section only applies if no qualifying interest in possession (for deaths on or after 22 March 2006, this means only an immediate post-death interest or a disabled person's interest) has arisen in the property before the relevant event takes place.
• Where the event would otherwise trigger an exit charge under the relevant property trust rules, that charge is cancelled; where the event would have triggered a charge but for specific reliefs (such as those for employee trusts, charities, or heritage maintenance funds), the read-back treatment still applies.
• Special provisions introduced by the Finance Act 2006 ensure that trustees can, within the two-year window, appoint property onto trusts that qualify as immediate post-death interests, bereaved minor trusts, or age 18-to-25 trusts, even though these categories can normally only arise under a will or intestacy, by treating the appointment as if it had been written into the will.