Managing trusts and tax

Timely tax planning advice saves over £3 million in UK inheritance tax (IHT)

Our client is resident and domiciled in the UK; her late father was domiciled abroad and her share of his estate is estimated at around £10 million.

As advice was sought within two years of death, our client was able to divert her inheritance to a trust which, for UK tax purposes only, is treated as if her father had made the gift to the trust.  Our client and her children will be able to benefit from the trust, but as her father will be the deemed settlor of the trust for UK IHT, the value of the trust fund will be kept outside of their own taxable estates.

Ordinarily UK trusts are subject to their own IHT regime, however in this case as the trust fund will be held offshore, the usual IHT tenth anniversary and exit charges will not apply.

The trust structure has the added advantage of protecting our client’s inheritance from divorce and from potential predatory third parties.

Una is now in the process of advising the next generation of the family in relation to their own affairs.

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