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Talking Trusts – Access v Control v IHT

Session: 17 February 2022

While the nil rate band and residence nil rate band frozen until the 5th April 2026 this doesn’t mean the value of your client’s assets will do the same. For those who are concerned about IHT delaying taking any action is only going to increase their IHT bill, decreasing the amount of the estate that can be passed onto family on death. 

Through the use of a case study, M&G Wealth Technical Manager Neil Macleod looked at how using standard "off the shelf" trusts can help your client get the correct balance of access, control and tax savings to deliver the maximum amount of wealth to the next generation.  

After taking part in that session you should now be able to:

  • Explain the tax treatment of gifts into trust.
  • Calculate the amount of available nil rate and residence nil rate band your clients have
  • Evaluate different types of trust to meet clients intergenerational planning objectives

Presenter – Neil Macleod – M&G Wealth Technical Manager

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 through to claim your CPD certificate on the link below.


Test your knowledge

1)      Damien sets up a loan trust with £300,000 and the trustees invest the money into an investment bond. Damien dies 7 years later having had ad hoc loan repayments totalling £105,000. The bond had a surrender value of £350,000 at the date of Damien’s death. How much should be included in Damien’s estate for IHT?

a)       £350,000

b)      £175,000

c)       £105,000

d)      £195,000


2)      Jennifer decides to make gifts to each of her 2 children. She gives her son Anthony £200,000 in March 2021 and then gifts her daughter Amy £200,000 a month later. Jennifer dies in May 2024. Assuming there is no transferable nil rate band to claim on Jennifer’s death, which of the following statements is correct?

a)       As both gifts were made over 3 years ago they will both benefit from taper relief

b)      Only Amy’s gift will get taper relief

c)       Only Anthony’s gift will get taper relief

d)      Neither gift will benefit from taper relief


3)      Esther wants to make a gift of £500,000 into trust as part of her IHT planning but requires a regular payment of £1,500 pm to supplement her income. Her adviser recommends a discounted gift trust. After underwriting it is decided Esther’s gift will receive a discount of 43%. Esther dies after 3 years at which point the value of the trust is £510,000. How much is included in Esther’s estate for IHT?

a)       £500,000

b)      £215,000

c)       £285,000

d)      £510,000


4)      Mrs Wilkinson sets up a discretionary loan trust with a loan of £1,000,000. She decides to have any outstanding loan waived on her death. Which of the following statements is correct in relation to the outstanding loan?

a)       The loan will not form part of the estate for IHT when she dies

b)      The loan will be included in the estate for IHT on death but will form part of the trust fund, distributed at the trustees’ discretion

c)       The loan will not be included in the estate but will be distributed in accordance with Mrs Wilkinson’s Will

d)      Mrs Wilkinson’s executors can use their discretion to decide who will benefit from the outstanding loan on Mrs Wilkinson’s death

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