When a person dies, there is often no right to receive any further payment under an annuity. However, many annuities are sold which have 'guaranteed minimum payment periods' - typically five years after the annuity first vests. In such cases, if a person dies before the end of the minimum payment period, further annuity payments will be receivable.
Valuing the right to receive such payments for Inheritance Tax (IHT) purposes can be problematic, but HM Revenue and Customs (HMRC) have an online calculator which provides an estimate of the open market value of the guaranteed annuity payments in straightforward circumstances. This consists of a form requesting the information necessary for the calculation to be made. In the view of HMRC, the estimate given by the electronic calculator constitutes a reasonable estimate of the open market value of the annuity for IHT purposes.
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