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

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Presentation on theme: "Inheritance tax planning case study Anthony Whitwell 8 th November 2012."— Presentation transcript:

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2 Inheritance tax planning case study Anthony Whitwell 8 th November 2012

3 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!

4 The Chichester Family Ron--------Ivy Sue (Graham) Peter and Ann Colin (Su Lin)

5 Chichester!

6 Ron One half of 12 Cathedral Close £300,000 Cash £400,000 Total £700,000 NRB £325,000 Will: 1.All to Ivy 2.Then to Sue & Colin equally DOV: 1.2% share of Cathedral Close to Sue & Colin 2.£28,000 to Peter and Ann 3.£285,000 on NRB Discretionary Trusts 4.Residue to Ivy on life interest

7 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

8 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 Ivy

9 % 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 Tax Benefits

10 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

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

12 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

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

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

15 It’s not all about TAX! Bankruptcy Divorce Business failure Cash Management

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

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