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Legal Terms – Gift with Reservation
A gift from an individual of property occurs when either (1) the donee does not genuinely assume possession and enjoyment of the property, or (2) the property is not enjoyed to the complete, or nearly complete, exclusion of the donor, nor does the donor derive any benefit from it through contract or other means (Finance Act 1986 s 102 and sch 20). Gifts with reservations are subject to inheritance tax in the usual manner. For the calculation of inheritance tax upon death, the gifted property is considered as if it remained within the donor's estate. Consequently, there may be a dual imposition of inheritance tax; in these instances, legislative instrument SI 1987/1130 article 6(4) applies to levy the greater of the two obligations.
A gift from an individual of property occurs when either (1) the donee does not genuinely assume possession and enjoyment of the property, or (2) the property is not enjoyed to the complete, or nearly complete, exclusion of the donor, nor does the donor derive any benefit from it through contract or other means (Finance Act 1986 s 102 and sch 20). Gifts with reservations are subject to inheritance tax in the usual manner. For the calculation of inheritance tax upon death, the gifted property is considered as if it remained within the donor's estate. Consequently, there may be a dual imposition of inheritance tax; in these instances, legislative instrument SI 1987/1130 article 6(4) applies to levy the greater of the two obligations.
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