Robert and Francis have been longstanding clients of Torevell & Partners. Having built up a substantial portfolio, they wanted to start the process of reducing their Inheritance Tax (IHT) exposure.  They also wanted to retain some access to their investments as well as continuing to receive an income in retirement.

We recommended that they restructure a proportion of their portfolio using a combination of loan trusts and a discounted gift trust (DGT), for the future benefit of their children and grandchildren.

The loan trusts helped to gradually move assets outside of their estate whilst providing an income and the possibility to recall their loan if they needed access to capital. The DGT provided a more immediate IHT saving, with part of the investment outside of their estate from day one, and the remainder falling outside their estate after seven years. The DGT also provides them with an income in retirement.

As part of the trust planning, we carefully managed the order in which the trusts were created. By establishing the loan trusts before the DGTs, we were able to maximise the IHT Nil Rate Bands which were available to the trustees of each trust. Furthermore, we split the loan trust allocation into two separate loan trusts established on separate days, providing each loan trust (and the DGT) with a full Nil Rate Band.

Seven years on these trusts have moved over £800,000 of assets from their estate (saving over £320,000 in Inheritance Tax) and continue to provide a tax efficient income and growth.