What is an IPDI (Immediate Post-Death Interest) trust and how does it affect the surviving spouse?
- 1An IPDI trust gives the surviving spouse a life interest — the right to income from the trust fund for life, but not the capital.
- 2On the death of the life tenant (surviving spouse), the capital passes to the 'remaindermen' — usually the children.
- 3For IHT purposes, the IPDI is treated as part of the surviving spouse's estate on their death — the spousal exemption applies on the first death. The residence nil-rate band does not apply on the first death, because a spouse is not a direct descendant.
- 4The IPDI is the main modern alternative to an outright bequest to a surviving spouse, offering protection for children from a previous relationship.
- 5The surviving spouse has no right to spend or give away the capital — the trustees hold it for the remaindermen.
A life interest trust (specifically an Immediate Post-Death Interest, or IPDI) is created by a will to provide the surviving spouse with income or use of assets during their lifetime, while ensuring the capital passes to the children on the second death. It is a common structure for blended families and for those who want to preserve the family estate for the next generation.
How the IPDI trust works
On the death of the first spouse, their estate (or part of it) passes into the IPDI trust rather than directly to the surviving spouse. The trustees hold the assets, and the surviving spouse is the "life tenant" — they have the right to receive income from the trust and to use any property within it (e.g., to live in the family home).
The "remaindermen" — typically the children — are entitled to the capital when the life tenant dies. They may wait many years for this.
Typical assets held in an IPDI trust include:
- The matrimonial home (the life tenant has the right to live there)
- Investment portfolios (the life tenant receives dividends and interest)
- Rental property (the life tenant receives the rental income)
- Cash and bank accounts (the life tenant receives interest)
IHT treatment of an IPDI
One of the key features of the IPDI structure is its IHT treatment:
- On the first death: The assets passing into the IPDI trust qualify for the spousal exemption — no IHT is due on the first death.
- On the life tenant's death: The IPDI assets are treated as forming part of the life tenant's estate for IHT. The life tenant's nil-rate band applies, and the residence nil-rate band can apply if a home in the trust then passes to direct descendants.
- Transferable NRB: The unused nil-rate band transfers between spouses and civil partners only — it does not pass to the remaindermen. Because everything going into the IPDI on the first death is spouse-exempt, the first spouse's nil-rate band is usually unused, and the surviving spouse's personal representatives can claim that unused proportion on the second death.
- RNRB on the first death: none is available. The residence nil-rate band requires the home to be inherited by a direct descendant, and a spouse or civil partner is not one. The allowance is not lost — the unused proportion transfers in the same way as the nil-rate band.
This differs from a discretionary trust, which is relevant property and so is within the regime of ten-yearly principal charges and exit charges. An IPDI is a "qualifying interest in possession" under the IHT legislation, so the trust property is taxed as part of the life tenant's estate on their death instead.
For the full IHT context, see our inheritance tax UK 2026–27 guide.
Why use an IPDI trust?
An IPDI is typically used in the following situations:
- Blended families: Where the deceased has children from a previous relationship and wants to ensure the capital ultimately passes to those children (not to the surviving spouse's subsequent partner)
- Protecting the family home: The surviving spouse can continue living in the home, but cannot sell it and spend the proceeds (without trustee consent)
- Care fees: how a life interest is treated in a local authority financial assessment is governed by the Care Act 2014 and the Care and Support (Charging and Assessment of Resources) Regulations 2014, and turns on the facts of the particular trust. No official source states that an IPDI protects a home from care charges, and this guide does not assert that it does
- Preserving the estate: Ensuring that the capital is not dissipated by the surviving spouse and is preserved for the children
The trustees' role
The trustees of an IPDI trust have important responsibilities:
- Holding the trust assets and investing them appropriately
- Collecting and paying income to the life tenant
- Maintaining the trust property (e.g., insuring and repairing the family home)
- Balancing the interests of the life tenant and the remaindermen
- Keeping accounts and tax records
- Completing the SA900 trust tax return each year if the trust has income
The trustees are often the same as the executors, but they hold a distinct role. Acting as trustee is a long-term commitment that can last for decades.
The life tenant's rights and limitations
The life tenant (surviving spouse) has the right to:
- Receive all income produced by the trust assets
- Occupy any residential property in the trust
- Receive information about the trust from the trustees
The life tenant does not have the right to:
- Access or spend the capital
- Direct who receives the capital on their death (that is fixed by the will)
- Sell trust property without the trustees' consent
If the will gives the trustees power to advance capital to the life tenant, this can be done — but it reduces what eventually passes to the remaindermen.
What happens when the life tenant dies
On the death of the life tenant, the IPDI trust terminates. The trustees distribute the trust assets to the remaindermen as specified in the will. This is a separate estate administration process — the executor of the life tenant's own estate and the trustee of the IPDI trust must both act.
IHT is calculated on the life tenant's estate including the IPDI assets. The trustees may need to pay IHT attributable to the IPDI assets from the trust fund before distributing to the remaindermen.
For the general estate administration process, see our estate administration checklist, complete UK probate guide 2026, and applying for probate. Related trust structures are explained in our nil rate band discretionary trust guide and bare trust for minor beneficiaries guide. For annual trust tax returns, see our SA900 trust tax return guide. The IHT400 guide covers the IHT reporting process. For the executor's first steps, see our executor first steps guide. For deed of variation options, see our deed of variation guide.