WOL policy in discretionary trust to use annual IHT exemptions
We are potentially looking to recommend our clients use both of their £3,000 gifting allowances (£6,000 total) to set up a fixed premium guaranteed whole of life policy, second death, written under discretionary trust.
However, I just want to be straight on the IHT logistics of this, as the information around is not overly clear.
1) Am I right in thinking that the gifting allowance is chronological over a tax year and not purpose specific? e.g. If you made a £3,000 gift on the 6th April, followed by a £3,000 gift to someone else on the 31st September, the April gift will always use the allowance first and then the September gift will become the PET?
2) With the above in mind, should the policy be set up as an annual premium of £6,000 as close to the start of the tax year or does it not matter and so a monthly of £500 could be arranged?
3) If the once the policy has been set up, the client were to gift more money away (e.g. as a £10,000 PET), then would the monthly premium have the risk of becoming a list of £500 CLTs after the PET every time until the end of the tax year?
Hope the above makes sense, but if anyone can shed any light on the most practical way to approach this kind of advice, that would be appreciated