|>>|| No. 7625
Depending on the wording trusts have the power to make a loan to beneficiaries. By stating that this loan can be recalled at any time it isn't deemed to be deliberately depriving the trust fund. This is well established.
The loan may also have Inheritance Tax implications. Even if the trustees decide to make the loan on an interest-free basis, they may well reserve the right to require a repayment at short notice, so that it cannot be argued that the effect of making the loan was to depreciate the trust fund (possibly attracting an IHT charge under s65(1)(b) of the IHT Act 1984). In any event, on general principles, the loan will be:
(i) an asset in the trustees’ hands; and
(ii) a liability of the beneficiary.
That liability should serve to reduce the value of the beneficiary’s estate for IHT purposes, under s5 of the IHT Act 1984. Certainly, the beneficiary having received the loan will have given full consideration for that liability as required by s5(5). This is entirely fair and reasonable...
I haven't seen anything whatsoever that supports your assertion.