PET - CLT - PET

Jona

Husband and wife client has made significant PETs in last 7 years (circa 180K, some chunky ones more recently).

Now wants to set up a Disc. Gift Trust.

So, to avoid periodica charging issues in the future, probably best to net off NRB by prior PETs?

To muddy waters further they want to carry on making PETs post Trust creation.....

I am thinking reduce again the amount to go into Trust by the value of the future PETs due to potential tax on failed PETs and further loss of NRB for the estate?

Any thoughts or obvious issues with this....?

Clients are both in their 80s - trying to demonstrate that perhaps a BPR route may be more beneficial to them.....

Andy_Schleider

I can't help much with the PETs but would a WoL help with potential IHT bills on failed PETs and beyond?

Jona

Yes looking at that too

£44K+ per annum premium (before underwriting!!!!) to insure the current liability.

PETs are across 2 children and 7 grandchildren so multiple gift inter-vivos on future PETs (if we go down that route) - it gets very messy as dates of future gifts and amounts not known and relies on the client being very proactive in this regard.

T_Smith

Watch out on the ordering of the gifts too as failed PEts may bring CLTs within 7 years of the failed PET back into the IHT calculation.

Jona

Yes exactly. BPR is cleaner and future gifts can continue as PETs rather than muddying the waters with a CLT now.

Client wants a Trust though............

Oldhandnewhand

@Jona said:
Yes looking at that too

£44K+ per annum premium (before underwriting!!!!) to insure the current liability.

PETs are across 2 children and 7 grandchildren so multiple gift inter-vivos on future PETs (if we go down that route) - it gets very messy as dates of future gifts and amounts not known and relies on the client being very proactive in this regard.

And don't forget that the premia themselves are PETs.

By BPR you mean Business Property Relief? If so, you need to be aware that if the company is holding that much cash they may lose BPR on that value as it isn't being held for a business purpose.