Why use a Business Property Relief Discretionary Trust?

Business Property Relief (BPR)

By | Business Property Relief | No Comments

What is BPR? A relief applied to business property and can provide up to 100% relief from Inheritance Tax. There are a number of conditions which are required to be met: The business must be a qualifying business, The business must be what is referred to as ‘relevant business property’, and; Ownership conditions must be fulfilled. The business must be a trading business rather than an investment business and therefore must meet the ‘wholly and mainly’ test of trading, meaning that the business must not consist wholly or mainly of the making or holding of investments. In other words; businesses which deal in securities, stocks and shares or in land and buildings such as buy-to-let portfolios will not attract the relief. Property developing itself may attract the relief but the renting out of property is an investment activity therefore making it a mixed business and if the business consists of…

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By | Abatement | No Comments

Abatement is the statutory order in which assets are used towards expenses, liabilities and debts. This order is dependent on whether the estate is solvent or insolvent. Where the estate is insolvent (the estate is insufficient to meet its liabilities), all gifts in the Will fail, as everything will be used to meet the estate’s liabilities. Where the estate is solvent (the estate is sufficient to meet its liabilities), the order in which assets are used to cover liabilities is covered by the First Schedule of the Administration of Estates Act 1925, however, to fully understand the order stated in the 1925 Act a distinction should be made between the various types of gifts that can be made in a Will. Specific gifts are gifts of some particular identifiable possession or item that is a distinguishable part of the Testator’s estate. For example, gifts of chattels, jewellery, real property or…

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General Discretionary Trust

By | Trustees, Trusts | No Comments

A General/Standard Discretionary Trust has a wide range of uses from protecting assets from the beneficiaries themselves, or third parties seeking money from the beneficiaries. As the assets are held by the Trust, it is out of direct reach of the beneficiaries and is not considered as part of their estate. However, for the Trust to work in this way, there must be more than one beneficiary of the Trust, otherwise the assets are deemed to be owned by that one beneficiary, making this level of protection ineffective. The General Discretionary Trust is useful for making provisions for a dependant, or any other person(s) who could claim under the Inheritance (Provisions for Family and Dependants) Act 1975, without them directly inheriting. This reduces the risk of a successful claim against the estate. This could, however, leave the Trustees in a difficult position of being pressured by this beneficiary. The Trust…

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