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Inheritance tax planning case study

Inheritance tax planning case study. Anthony Whitwell 8 th November 2012. Outcomes:. Identify Variation scenarios vs. the TNRB When a property worth £x is not worth £x Maintaining accurate records The power to loan Find a good trust and tax solicitor!. The Chichester Family. Chichester!.

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Inheritance tax planning case study

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  1. Inheritance tax planning case study Anthony Whitwell 8th November 2012

  2. Outcomes: • Identify Variation scenarios vs. the TNRB • When a property worth £x is not worth £x • Maintaining accurate records • The power to loan • Find a good trust and tax solicitor!

  3. The Chichester Family

  4. Chichester!

  5. Ron • Will: • All to Ivy • Then to Sue & Colin equally • DOV: • 2% share of Cathedral Close • to Sue & Colin • £28,000 to Peter and Ann • £285,000 on NRBDiscretionary Trusts • 4. Residue to Ivy on life interest • One half of 12 • Cathedral Close £300,000 • Cash £400,000 • Total £700,000 NRB £325,000

  6. Ron • 2% of 12 Cathedral Close to Sue 6,000 • 2% of 12 Cathedral Close to Colin 6,000 • Cash legacies 28,000 • NRB D.T. 285,000 • Residue to Ivy comprising: • 96% of 12 Cathedral Close 288,000 • Cash 87,000 • Total: 700,000

  7. Ivy • Ivy owns 98% of 12 Cathedral Close.Discount reduces MV of £600,000 to £529,200 • £285,000 invested with IFA increases to £347,500 by Ivy’s death. Ivy a beneficiary but value excluded from her estate. Exit in 10 years and CGT issues • Residue on life interest trusts and LA assessments on £375,000

  8. Tax Benefits % gifts to Sue & Colin. Tax cost £12,000 IHT £4,800 Gain on fragmentation £28,320 Exclusion of NRB D.T. £139,000 Total tax saving £167,320 cf. 40% of £325,000 £130,000

  9. Ivy - Lifetime Planning Excess Income Rules & records Net income £31,500 Regular payments £2,500 pcm Trust & loan. Use of funds… Tax saving £12,600 pa

  10. Ivy - Lifetime Planning • DGS – immediate discount • BPR – 2 years • Insurance for IHT – in trust please!

  11. Ivy – Lifetime Planning New Will and Trusts Will Estate £2.2m Net £1.3m Ivy Trust 1 £325,000 Ivy Trust 2 £325,000 Ivy Trust 3 £325,000 Ivy Trust 4 £325,000

  12. DGS £320,000 Ron’s NRB DT £347,500 DGS £250,000 DGS £300,000 Ivy Trust 4 £325,000 Sue & Family Loans £3.117m +BPR £200 Total £3.317m Ivy Trust 3 £325,000 Life Ins Trust £300,000 Ivy Trust 2 £325,000 Life Ins Trust £300,000 Ivy Trust 1 £325,000 BPR £200,000

  13. Sue and Graham Personal Estate £ 650,000 Loans £3,117,000 BPR £ 200,000 Total £3,967,000 What really happened ….

  14. It’s not all about TAX! • Bankruptcy • Divorce • Business failure • Cash Management

  15. and finally … Questions, questions, questions …. AND Some Answers!

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