Trusts School Lesson 6

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1. There has been an increased interest in business relief investments for IHT planning since the announcement that most pensions will be included in the estate from 6 April 2027. Which of the following is not a feature of business relief investments?

a) Investments may be eligible for relief once held for 2 years

b) Qualifying investments do not form part of the estate of the owner if held for 2 years

c) The relief is claimed on death of the owner of the qualifying assets

d) Relief at 100% is capped at £2.5m per individual (excluding the unused amount of a deceased spouse or civil partner)

2. After speaking to her financial adviser, Amelie has decided to put in place a whole of life policy which will pay out on her death and can be used to pay her IHT liability. Her adviser recommends that the policy is placed into a discretionary trust so that the proceeds will not form part of her estate. Which of the following statements is incorrect?

a) Premiums are classed as gifts for IHT purposes

b) Premiums will automatically be exempt from IHT due to the normal expenditure out of income exemption

c) Premiums will be chargeable lifetime transfers to the extent they are not covered by an exemption

3. Steve has an IHT liability. He has £325,000 that he knows he does not require access to that he can afford to put towards his IHT planning. They discussed making outright gifts to his two children but Steve wants to make sure he has some control over when his children can access the money. His financial adviser has been explaining the potential options for the money, including the pros and cons of different solutions. Taking into account Steve’s access and control requirements, which of the following is the least suitable solution for the money?

a) Business relief

b) A discretionary Gift Trust

c) A discretionary Discounted Gift Trust

d) A discretionary Reversionary Interest Trust

1. There has been an increased interest in business relief investments for IHT planning since the  announcement that most pensions will be included in the estate from 6 April 2027. Which of the following is not a feature of business relief investments?

a) Investments may be eligible for relief once held for 2 years

b) Qualifying investments do not form part of the estate of the owner if held for 2 years (correct)

c) The relief is claimed on death of the owner of the qualifying assets

d) Relief at 100% is capped at £2.5m per individual (excluding the unused amount of a deceased spouse or civil partner)

2. After speaking to her financial adviser, Amelie has decided to put in place a whole of life policy which will pay out on her death and can be used to pay her IHT liability. Her adviser recommends that the policy is placed into a discretionary trust so that the proceeds will not form part of her estate. Which of the following statements is incorrect?

a) Premiums are classed as gifts for IHT purposes

b) Premiums will automatically be exempt from IHT due to the normal expenditure out of income exemption (correct)

c) Premiums will be chargeable lifetime transfers to the extent they are not covered by an exemption

3. Steve has an IHT liability. He has £325,000 that he knows he does not require access to that he can afford to put towards his IHT planning. They discussed making outright gifts to his two children but Steve wants to make sure he has some control over when his children can access the money. His financial adviser has been explaining the potential options for the money, including the pros and cons of different solutions. Taking into account Steve’s access and control requirements, which of the following is the least suitable solution for the money?

a) Business relief

b) A discretionary Gift Trust

c) A discretionary Discounted Gift Trust (correct)

d) A discretionary Reversionary Interest Trust

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