Tax Value of Property Transferred to Inheritance Trust

Question

A deceased individual owned a share in a limited partnership which owned forestry. We are aware that an exemption applies, which allows the transfer to the beneficiaries if they are within the second degree, to be at tax book value. In this case the deceased's children have inheritance trusts (set up as part of the will) which are the beneficiaries of the interests in the limited partnership. Do the inheritance trusts qualify for the exemption?

Answer

Transfers of such property are treated as a transfer under a relationship agreement, that is, the assets are transferred at the tax book value. The effect of this exception is that the tax  consequences of the transfer of the property are realised when the transferee disposes of the inherited property. The transfers to the trusts as part of the terms of the will, will not need to apply the normal asset transfer rules.