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Gift that keeps on giving
Key points
- A common dilemma for older clients is to reduce inheritance tax exposure while maintaining income.
- Discounted gift trusts may be established on a discretionary or absolute basis.
- The ‘discount’ will depend on the settlor’s age and life expectancy.
- Settlors should ensure that trustees of discretionary trusts are aware of their wishes.
- Discretionary trusts may be subject to ten-yearly and exit charges.
- An absolute trust may be suitable if there is more certainty as to beneficiaries.
- From 2020 discounted gift trusts must be registered with HMRC’s trust registration service.
As they draw near to retirement many private clients become concerned about their exposure to inheritance tax. They wish to discuss not only the mitigation of this tax but capital taxes generally as they seek to provide for their children and later generations.
A common concern is how this can be achieved when clients are asset rich but have little disposable cash. The...
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