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JGM, Solicitor
Category: Scots Law
Satisfied Customers: 12554
Experience:  30 years as a practising solicitor.
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Are trusts a reliable way to minimise inheritance tax

Customer Question

Are trusts a reliable way to minimise inheritance tax liability?
Submitted: 1 year ago.
Category: Scots Law
Expert:  clairep80 replied 1 year ago.

Thank you for your question

My name is Clare

I shall do my best to help you but I need some further information first

Could you explain a little about the background to your question please

Customer: replied 1 year ago.
I am 54 years old unmarried no children and I have accumulated assets which take me over the £325k for inheritance tax. Can I use a trust to protect assets - property, cash and insurance policy from being regarded as part of my estate? I am aware of the 7 year rule on gifts before death...There is a range of views, HMRC sem to be saying that Trusts won't protect within seven years of setup to death numerous websites attest to their potential value is correct?My insurer Aviva has the concept of putting my insurance policy into a Trust but the document they have sent me is unclear in respect of inheritance tax.Can you clarify?Thanks and regards,Martin Hutchison
Expert:  clairep80 replied 1 year ago.

Who will benefit from the Trust?

Customer: replied 1 year ago.
Hi ClareIt depends which subset of my assets go into a Trust and to which Trust. Aviva are suggesting a Trust for their insurance policy only.I have three assets types: properties (3 off) that I want to leave to my niece and nephew, cash and the insurance policy which I want to leave to my sister. Is that one Trust for all, two Trusts (Insurance and other) or no Trusts because they don't work. HMRC doesn't think they work.This question is prompted by a current health fear suggesting that 7 years more life might not be available.Best regards,Martin
Expert:  clairep80 replied 1 year ago.

How much above the limit are you - would taking the Policy out solve the problem?

Customer: replied 1 year ago.
Hi ClareIf the Avivia Trust policy worked it would still leave a substantial liability in respect of the other assets. I need a whole asset base solution.I live in Scotland by the way....Thanks and regardsMartin
Expert:  clairep80 replied 1 year ago.

In that case I shall opt out and transfer this to the correct section - there may be nuances I am not aware of!

Expert:  Nicola-mod replied 1 year ago.
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Customer: replied 1 year ago.
Hi NicolaPlease keep looking. I appreciate the effort.Regards,Martin
Expert:  Nicola-mod replied 1 year ago.
We will continue to look for a Professional to assist you.
Thank you for your patience,
Expert:  JGM replied 1 year ago.

I am a solicitor in Scotland. There are various types of trust that could be set up and you could transfer assets into the trust. However, the general thread that would run through a trust mechanism is that you would have to survive seven years to ensure that inheritance tax was not due from your estate on your death. In addition to that certain types of trust would result in you having to pay a certain amount of IHT before you does and a balance would be due after your death. From the information you have given, unless you survive seven years from the date that the property is placed in trust I don't think there is a solution for you. You can have a look at this link if you haven't already:

Customer: replied 1 year ago.
Thank you for this. That is what I thought, short of seven years there really is no solution although the literature on Trusts from the Trust providers tends to obfuscate this fact.If there is no workaround worth discussing of the seven years then I should just pay you and say thanks. How do I pay...?Regards,Martin
Expert:  JGM replied 1 year ago.

I've thought about this but really don't see a way round it where you're not provided for a wife or children. You can pay by leaving a positive rating on the system and the site will credit me for my time. Thank you for using JustAnswer.