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The client was a married individual who owns several properties in the UK, alongside cash assets and pension arrangements. At the time of instructing us, the client was living and working abroad.
We began with a detailed fact-find to understand the client’s financial landscape, family structure, and long-term objectives. Particular attention was given to the need to balance asset protection with continued financial flexibility.
The client’s key objectives were:
Implement effective succession planning for children and grandchildren
Safeguard assets from potential third-party claims
Maintain income from property holdings while preserving cash assets
Reduce the overall value of their taxable estate
Retain an appropriate degree of control over how funds may ultimately be used
We explored a range of trust and gifting structures, carefully assessing the tax implications and practical considerations of each. Given the client’s age, there was also significant scope for further lifetime planning, including the potential use of exempt transfers and the operation of the seven-year rule for inheritance tax purposes.
Following this review, we recommended establishing a trust funded up to the inheritance tax nil rate band (£325,000).
A discretionary trust was identified as the most suitable vehicle due to its flexibility and protective qualities. Funding the trust within the nil rate band meant the settlement would not trigger an immediate inheritance tax charge that can otherwise arise on a chargeable lifetime transfer (CLT). We advised that amounts exceeding the available threshold could attract a lifetime charge (typically up to 20%), reinforcing the importance of precise structuring at the outset.
This approach delivered several advantages:
Immediate reduction in the value of the client’s estate for inheritance tax purposes
Preservation of assets within a controlled structure
Flexibility to adapt distributions as family circumstances evolve
The settlor was appointed as a trustee alongside their children and a sibling. This enabled the client to retain involvement in decision-making while ensuring the trust benefited from collective trusteeship.
Trustees were granted discretionary powers to apply funds for beneficiaries, primarily for:
Education
Maintenance
This flexibility ensures the trust can respond to changing needs across multiple generations.
Following our recommendation, we issued a detailed letter of advice setting out:
The options considered
Associated tax treatment
Advantages and potential risks
Key considerations for the future
Clear next steps and costs
After a further discussion to address final queries, the client instructed us to proceed with the trust’s creation.
We drafted the trust deed with provisions designed to support both control and long-term use, including:
Discretionary powers for trustees
Flexible beneficiary provisions
Administrative powers to assist with the management of trust assets
The documentation was prepared and finalised within 2–4 weeks.
The creation of the discretionary trust enabled the client to take a decisive step toward structured succession planning while maintaining confidence in the protection and stewardship of their wealth.
The arrangement:
Reduced the size of the client’s taxable estate
Preserved key assets within a protective framework
Supported future generations in a controlled and flexible manner
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