To claim your CPD certificate, test your knowledge with the questions below.
Write down your answers to each of the following questions and check your answers when you click to claim your CPD certificate on the link below
1. Joe has an IHT liability and after discussions with his financial adviser decides to place £300,000 into a discretionary trust for the benefit of his children and grandchildren. He is very happy with the recommendation as he will still have full access to the £300,000 placed into the trust from outset. Which trust is Joe setting up?
a) Gift trust
b) Discounted gift trust
c) Reversionary interest trust
d) Loan trust
2. After speaking to her financial adviser, Amelie has agreed to set up a discretionary discounted gift trust with £500,000. After underwriting the insurance company have calculated that a discount of 36% will apply to the gift. Assuming no gifting exemptions apply, which of the following statements is correct?
a) Amelie will be making a potentially exempt transfer of £180,000
b) Amelie will be making a chargeable lifetime transfer of £180,000
c) Amelie will be making a potentially exempt transfer of £320,000
d) Amelie will be making a chargeable lifetime transfer of £320,000
3. Steve has an IHT liability. His financial adviser has been explaining his options for more planning and they end up discussing the normal expenditure out of income exemption. After taking account of tax Steve has pension income of £32,000, receives dividend income of £5,000, and gets £1,000 per month from a discounted gift trust he set up a few years ago. His expenditure is approximately £35,000 p.a. If his expenditure assumption is correct how much surplus income does Steve have for the current tax year?
a) None
b) £2,000
c) £3,000
d) £14,000
