Inheritance Trust Fund

An inheritance trust fund is a useful tool for reducing the amount of inheritance tax (IHT) that might have to be paid on your estate, or that of your spouse.  The current nil-rate band for inheritance tax is £312,000, with estate value in excess of this amount being taxed at a 40% rate.  Although spousal inheritance is exempt from IHT, thus allowing you to transfer your entire estate to a spouse upon death without taxation, this does not make the most efficient use of both your and your spouse's nil-rate bands, so that the overall inheritance that you are passing on to your children is reduced.

  • If you pass your estate to your spouse, then when they pass away, the first £312,000 of the total combined estate will be exempt from IHT.
  • If you pass £312,000 on to beneficiaries and the rest to your spouse, then when they pass away and also have a nil-rate band of £312,000 to hand on, there will be an aggregate exemption of £600,000.  However, the loss of some of your assets to other beneficiaries may cause financial difficulties for your spouse.
  • The solution can be an inheritance trust fund.  When you pass away, £312,000 is put into creating the trust, avoiding IHT.  The income on this is paid to your spouse, and they may be able to access the capital in the trust.  When your spouse passes away, their estate will have a £312,000 exemption, and the fund will be paid out according to the set terms and time scale.

You can apply conditions and terms to the inheritance trust fund and the manner and circumstances under which its worth is released, giving you a measure of control over how the wealth will be used and to who it will eventually be given.

For expert inheritance trust fund information from qualified professionals, fill out our online enquiry form.  You will be put into contact with UK financial consultants for a free first consultation as a no-obligation arrangement.

Disclaimer: Every effort is made to keep the site accurate, however please bear in mind that tax rates are subject to change. If you require tax advice you should speak to a professional tax adviser.