A Gift Inter Vivos Plan is a term assurance plan, which provides an amount of death benefit equivalent to the Inheritance Tax liability of a Potentially Exempt Transfer (PET) associated with a lifetime gift. The level of cover decreases over a term of  7 years, reducing each year in line with the liability to tax on the value of the gift. Useful if the you can and wishes to make a PET.

However it must be remembered that the nil rate band (currently £275,000) will not become available again until 7 years have passed If you die during the 7 years the PET will be deemed to have 'failed'. Therefore you should always protect the amount of the PET that falls within the nil rate band with pure term assurance.

If you make more than on PET you need to calculate the point at which the nil rate band( or part of it) becomes available again.

Here is an example

If you were to make PET for £500,000 in year 1 and another for £250,000 in year 4 you will need to calculate exactly your potential  liability in each year.

It is possible to buy life assurance to cover any combination of potential liability. 

Some life companies offer a legislation option this would allow the policy to be modified should rules change.

Currently not many companies offer this product and often it is just as expensive as pure term assurance or Maximum Whole of life. It may be worth exploring the possibility of taking a maximum whole of life plan and reducing the sum assured in line with the reduction of liability as the years go on.

Home | Whole Life | Term | Gift Inter Vivos