Lifetime Trusts and Section 102B gifts

Lifetime Trusts for Bloodline Planning and Asset Protection

Asset Protection Trust (APT)

  • Benefits of APT: asset protection from financial predation (divorce, bankruptcy claims), sideways inheritance, and means assessment subject to certain conditions such as foreseeability of care cost. Trust assets also have the benefit of probate avoidance and mitigate IHT for future generations.

Asset Protection Trust Plus (APT Plus)

  • Benefits of APT Plus: asset protection from financial predation (divorce, bankruptcy claims), sideways inheritance, and means assessment subject to certain conditions such as foreseeability of care cost. Trust assets also have the benefit of probate avoidance and mitigate IHT for future generations. In case RNRB allowance is needed for clients’ estate, the trust period can be varied to end the DTs. The main residence will then be distributed through the Will and will be subject to probate.

Settlor Excluded Asset Protection Trust Plus (APT Plus)

  • Benefits of SE APT: asset protection from financial predation (divorce, bankruptcy claims), sideways inheritance, and means assessment subject to certain conditions such as foreseeability of care cost. Trust assets also have the benefit of probate avoidance and mitigate IHT for future generations. Most importantly, the Trust assets will not form part of clients’ estate for IHT (at death) purposes after 7 years of survival.

Section 102B Gift

  • Gift away up to 50% of the primary residence to children during lifetime
  1. Potential Exempt Transfer (PET): Gifts through this arrangement qualifies as PET as per Section 3A, Inheritance Tax Act 1984. Therefore, there is no lifetime inheritance tax consideration on this.
  2. IHT (at death) efficiency: Value of section 102B gift will fall out client’s estate for IHT at death purposes after 7 years of survival if certain conditions (Lady Ingram case) are met.