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Event Summary
Trusts are often used to mitigate Inheritance Tax (IHT) and pass on wealth to family members but it’s important to select the right type of trusts to match a client’s needs for access and control over the trust property.
Learning outcomes
By the end of this session, you will be able to:
Claiming your CPD
1. A client wants to carry out some IHT Planning and is thinking of using a trust. They don’t need any access to the gift themselves and the intention is for their adult children to benefit from the trust at some point in the future. Which trust could meet these objectives?
a) Absolute Gift Trust
b) Discretionary Discounted Gift Trust
c) Absolute Loan Trust
d) Discretionary Gift Trust
2. Mr Johnson places £500,000 into a discretionary Discounted Gift Trust and has been told after underwriting that his discount is going to be 30.8%. Assuming no IHT exemptions apply, how will the gift into trust be treated for IHT purposes?
a) It will be a chargeable lifetime transfer of £500,000
b) It will be a potentially exempt transfer of £500,000
c) It will be a chargeable lifetime transfer of £346,000
d) It will be a chargeable lifetime transfer of £154,000
3. The settlor of a Discretionary Loan Trust dies. The trust was set up with a loan of £1,000,000 and the settlor had received loan repayments of £365,000 before they died. The trustees hold an investment bond worth £1,165,000. How much of this is held for the beneficiaries of the trust?
a) £635,000
b) £530,000
c) £1,165,000
d) £1,000,000
4. Jill set up a Discretionary Gift Trust 5 years ago for £325,000 which fully used up her nil rate band. She is looking to do some more trust planning. Which of the following new trusts would trigger an IHT entry charge?
a) Discretionary Loan Trust
b) Absolute Loan Trust
c) Absolute Gift Trust
d) Discretionary Discounted Gift Trust
1. A client wants to carry out some IHT Planning and is thinking of using a trust. They don’t need any access to the gift themselves and the intention is for their adult children to benefit from the trust at some point in the future. Which trust could meet these objectives?
a) Absolute Gift Trust
b) Discretionary Discounted Gift Trust
c) Absolute Loan Trust
d) Discretionary Gift Trust
2. Mr Johnson places £500,000 into a discretionary Discounted Gift Trust and has been told after underwriting that his discount is going to be 30.8%. Assuming no IHT exemptions apply, how will the gift into trust be treated for IHT purposes?
a) It will be a chargeable lifetime transfer of £500,000
b) It will be a potentially exempt transfer of £500,000
c) It will be a chargeable lifetime transfer of £346,000
d) It will be a chargeable lifetime transfer of £154,000
3. The settlor of a Discretionary Loan Trust dies. The trust was set up with a loan of £1,000,000 and the settlor had received loan repayments of £365,000 before they died. The trustees hold an investment bond worth £1,165,000. How much of this is held for the beneficiaries of the trust?
a) £635,000
b) £530,000
c) £1,165,000
d) £1,000,000
4. Jill set up a Discretionary Gift Trust 5 years ago for £325,000 which fully used up her nil rate band. She is looking to do some more trust planning. Which of the following new trusts would trigger an IHT entry charge?
a) Discretionary Loan Trust
b) Absolute Loan Trust
c) Absolute Gift Trust
d) Discretionary Discounted Gift Trust
Related
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IHT planning using Gift, Loan and Discounted Gift Trusts
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Are bonds the answer in the current tax landscape?
15 May 24
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