How To Save Inheritance Tax With Trusts

Here, trusts are explained in simple terms, including how you can still take income and how they can reduce inheritance tax.

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DISCLAIMER: This video is for education purposes only and does not represent financial advice. When investing, your capital is at risk. Investments can rise and fall and you may get back less than you invested. Past performance is no guarantee of future results. If you are unsure of what to do, always seek advice from a qualified financial adviser.

📑 ABOUT IHT AND TRUSTS 📑

Inheritance Tax (IHT) is a tax paid by the beneficiaries of your estate when it exceeds a certain size upon your death.

Trusts are often used in Inheritance Tax and estate planning as a way of gifting money to minimise tax, while still retaining some control over the trust assets, and potentially allowing the settlor (the creator of the trust) to still take an income.

Different types of trust products exist, and different tax rules apply depending on whether it is a bare (absolute) trust or a discretionary trust.

In this video I explain the basics of theee types of trusts:

Gift Trust (Discretionary)
Discounted Gift Trust
Loan Trust

🎬 ALSO WATCH 🎬

Pension Withdrawal Explained:

⏰ TIMESTAMPS ⏰

0:00 Start
1:06 Inheritance Tax Example
4:38 What is a Trust?
6:03 PETs and CLTs
7:55 Discretionary Gift Trust
10:19 Discounted Gift Trust
13:03 Loan Trust

[IainMcIntosh-my]

Good basic introduction to taxation + Trusts. Always remember the reduction in IHT rates starting 3 years after transfer only applies, I believe, for sums over the £ 325, 000 IHT allowance. Beware a Loan Trust I am aware of was subject to 30% tax because the beneficiaries were higher rate taxpayers. This may have been through Capital Gains Tax as the Trust had appreciated 600% over 30 years. It may be possible for the trust to alter the beneficiaries to a lower/non tax payer otherwise a saving of only 10% IHT is made and the Trust Administrators have chargerd 30% (30 years x1%).

[squadmeta]

I am dealing with a trust estate now, the wording makes it seem very complicated but in essence it's fairly straightforward. You've done a very good job of explaining the scenarios.

[Duncan]

I mainly watch for your stock market videos but thought I'd give this a watch as it's useful stuff to know. My mind is blown!

[paulevans]

Thanks for answering my question in making this video. I didn't realise how complicated this issue is, I'm OK with general investing, but this is on another level. I need to do a lot more research into this topic. Thanks again 👏👏👌👍

[rwsteward]

Fantastic video as always, you have a superb way of breaking down complex information, thanks Chris.

[johnporcella]

That was a vwey good video Chris!

I studied trusts when I did my ACCA exminations and understood nothing. I learnt more in this short video.

[jeffcallaghan]

I like the way you have explained it and your spreadsheet looked very professional

[dominic]

Excellent information- thank you! I want to gift house, but remain in it until death. Dont believe I should use an absolute trust for this due to pitfalls 👍🏻

[ipprp]

How to protect your asset and who will be in charge or beneficiary of the company when the sole director shareholder dies? What happens to those investment in the company and mortgages ? Please can you make a video of that and advise what to do to avoid the disaster of looking everything? Thank you. I love your videos posted 👍

[rogerandout]

Probably going to have to watch this one a few times to get my head around it! Nothing to do with the way it's presented, just complicated! Over time more and more estates are getting dragged into IHT with fiscal drag on the limits. With that, these solutions won't just be rich people's problems - they will become needed by the middle classes more with property price increases and care home costs etc.

[beingiwe]

I am really exited about finding you. Can't wait for the course and also will probably wanna bring you into my master plan that I am so confused about 😂

[pw]

Wow this is complicated, I'm not sure in our position a trust would be worth doing. What I'm more worried about is losing all our inheritance due to care home costs. I have a couple of friends who've recently been left with virtually nothing, due to care homes taking around £4k a month, which is more than most people earn !!!

[martinunsworth]

Excellent video Chris. Looking forward to the income tax and pensions video. Hoping you will cover something around maximising tax benefits over 2 years if you can’t eliminate the 61.25% rate with the £40k annual allowance.

[Thedudeofinfinity]

Hi Chris, a brilliant video explaining trusts for IHT. Would it be worth further building to talk about if an outright gift ( like a property) the settlor can no longer benefit from the asset for it to be treated as a PET eg they can no longer live in the property or they need to pay market rent . Also when making an outright gift there is something called a Gift in Vitro which is like an added insurance if the settlor dies within 7 years of gifting, it will be payed by the insurance.

[JimFerguson-mj]

Hi Chris, sorry I'm late to the party but glad I made it. Absolutely 1st class videos thank you for all your valuable knowledge, will need to study them in a bit more detail. You mentioned in one of them, that your client base is totally full...which is very understandable. Is there any good planners around my neck of the woods...Ayrshire/Glasgow way? Cheers Jim

[JohninRosc]

Excellent video as always. Many thanks.

[pauldyer]

Hi Chris, I’ve just subscribed. When is “Voyant” (spelling?) Master class video being released on YouTube? Great videos by the way. Many thanks

[lawrencer]

Another fabulous video.
Well done 🥰🥰🥰🥰🥳🥂👍🕺🏽

[abracadabra]

Jesus Chris 🤣🤣🤣...might have to watch this a million times. Any chance for a simple trust under 500K? Recommendation...

[jammydoughnut]

Hi Chris. Absolutely love your videos so a big thank you from me. A question about pensions being free from IHT - this seems to be the case up until the age of 75, but what happens after this? I cannot find any details? So, for clarity, if at 74 you have a personal pension pot of 500, 000 and you die, this could be passed to your child (as a pension pot presumably, not a lump sum) without being valued as part of your estate. But at 75 and after… does it incur full IHT at 40%? The information out there seems to go blank after 75 - your knowledge on this would be greatly appreciated! Thank you in advance!