Glossary · UK
What is Immediate Post-Death Interest?
A type of life interest in a will trust that takes effect immediately on death and is treated for tax as belonging to the life tenant.
Full Definition
An immediate post-death interest (IPDI) is a qualifying interest in possession created by a will (or intestacy) that takes effect immediately on the deceased's death, giving a named beneficiary - the life tenant - the right to income from, or use of, trust assets for life. A common example is leaving a spouse the right to live in the family home, with the property passing to children afterwards. For inheritance tax, the trust assets are treated as part of the life tenant's estate rather than being taxed under the separate relevant-property regime, so the spouse exemption can apply on the first death. When the life tenant later dies, the assets are aggregated with their own estate and may use the nil-rate band of GBP 325,000 plus, where relevant, the residence nil-rate band of GBP 175,000. IPDIs matter for estate planning because they balance providing for one beneficiary while preserving capital for others.