Trust and IHT

[shaner01]

Husband and wife have an investment property,which they would like to take out of IHTnet after gifting into the Discretionary Trust and waiting 7 years period.
I understand this is very specialist subject and I will need professional to carry out,but at this stage I am exploring,if its going to work and the taxation costs.
Surely,we will have to pay CGT.on transfer into the trust.
Once this property is in the trust,I am planning both my children become trustee and four of us become benificaries.(ie husband and wife and both children)
The investment is producing about 30K pa.Value at 275K.
We need to draw income from it.
My questions:
DO the trust have to pay tax on receiving the income?
On withdrawing from the trust,do we need to pay tax?
What other taxes are there,which I should be aware of?
Any idea of setting up cost?
Any pros and cons.
Thanking in advance and all help appreciated.

[Lee Young]

If you intend to remain a beneficiary of the property and its income after you put it into the discretionary trust then for inheritance taxc puproses you have not given anything away, Therefore you will incur a CGT biloon the dispsoal and not save any IHT.

If you were not to remain a beneficiairy after the gift into trust then the CGT bill can be deferred (ie the trustees will pay CGT on the sale if they dispose of the property) and IHT will be escaped if you survive 7 years from the gift. You have therefore to be certain you can afford to do without the income from the property before putting it into trust, which it appears you cannot.

You can sever the capital from the income and settle the capital value in trust, retaining going forward the income - but then you can not escape the CGT charge that might arise and there may be tricky POAT issues to navigate.

You definitely need expert advice and the fee is likley to be four figures!