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Where Taxpayers and Advisers Meet

discounted gift trusts

anj
Posts:3
Joined:Wed Aug 06, 2008 4:08 pm

Postby anj » Sun May 04, 2008 3:54 pm

thank you Bob, ian and David for your comments and your trouble. I understand most of what you say. I am aware of a current contested case re discount and I undestand the importance of Dad being medically underwritten. Not clear two things. 1 is the assignation of the house not entitled to taper relief - difference of opinion above ?
2 re DGT: how long does it take to set up a trust if mixture of cash and investments.if deed of variaton in place would it be better to use cash assets of mum and dads estate approx 300k and related query, not really clear re tax implications for beficiaries of trusts.

Have meeting end of May and will have to have made decisions by then

anj

Thankyou very much again for your help

bob.fraser@towrylaw.
Posts:765
Joined:Wed Aug 06, 2008 3:14 pm

Postby bob.fraser@towrylaw. » Mon May 05, 2008 12:06 pm

IHT taper relief only applies to that part of the cumulative gifts over the previous 7 years that EXCEEDS the nil rate band. And then it applies in reverse order; ie the relief is taken first from the most recent gift (with the lowest level of taper relief). So gifts up to the nil rate band have no relief; the amount above it might have if gifted 3 or more years ago.
The time to set up a DGT will depend on how long it takes to make the recommendations (following a proper analysis of all the circumtstances) and how long the medicals will take.
I'm afraid that I would not wish to comment on which assets to use since I do not have a sufficient understanding of your parent's affairs. But feel free to contact me if you want a more detailed discussion

Bob Fraser
Chartered Financial Planner

maths
Posts:8230
Joined:Wed Aug 06, 2008 3:25 pm

Postby maths » Tue May 06, 2008 2:29 am

I haven't followed this particular enquiry.

However, Bob, I do not understand your point:

"applies in reverse order; ie the relief is taken first from the most recent gift (with the lowest level of taper relief)"

I do not think this is correct but I may have misunderstood your point.

bob.fraser@towrylaw.
Posts:765
Joined:Wed Aug 06, 2008 3:14 pm

Postby bob.fraser@towrylaw. » Tue May 06, 2008 9:05 am

Hi Maths,
My point is that the nil rate band is absorbed progressively by each trust. ie, if the settlor dies in March 2008, having gifted £250,000 in 2002, £50,000 in 2003, and £100,000 in 2006, then no taper relief would apply since the £300,000 NRB was absorbed by the 2002 + 2003 trusts, and the 2006 trust had not yet passed the 3 year threshhold.

Bob


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