The Inheritance Tax treatment of discretionary (relevant property) trusts can be complicated. We have broken this down into four quick reference guides which provide a step by step guide to performing the calculation and demonstrate how multiple trusts may help reduce the tax due on the periodic and exit charges.
Quick reference guide 1 – Entry Charge (Chargeable Lifetime Transfers)
This guide will provide you with the information you require to advise clients on the potential Inheritance Tax charge on gifts into discretionary trusts.
Quick reference guide 2 – Periodic Charge (10 year charge or Principle Charge)
This guide will provide you with the information you require to advise trustees on the potential Inheritance Tax charge on 10 year anniversaries of a discretionary trust.
Quick reference guide 3 – Exit charge (Proportionate Charge)
This guide will provide you with the information you require to advise clients on the potential Inheritance Tax charge on distributions from discretionary trusts to beneficiaries.
Quick reference guide 4 – The Rysaffe Principle
This guide will provide you with the information you require to understand the Rysaffe Principle (the process of creating trusts on separate days) and how it may help reduce the tax due on the periodic and exit charges.