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>> No. 7610 Anonymous
10th July 2019
Wednesday 11:29 am
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My last paternal grandparent died relatively recently. My parents have been advised to set up a Deed of Variation, which is apparently re-writing my grandmother's Will so that their share of the inheritance doesn't go directly to them. The plan is for the funds to go into a trust and they will loan the money from the trust via a Promissory Note, with this liability repaid to the trust when they both die.

At least this is how I understand it. This is meant to allow them to have their cake and eat it; they get their hands on the inheritance but the debt to the trust will in turn reduce the value of their own estate when inheritance tax is calculated. They're well within the inheritance tax thresholds so it's not going to make any real difference unless the legislation is changed considerably, but it was also pitched to them that if an inheritance is placed in trust rather than eventually passed directly to me that it would be shielded if I ever ended up bankrupt or divorced.

This is one of those things that sounds too good to be true. If it isn't then why doesn't everyone do this?
Expand all images.
>> No. 7612 Anonymous
10th July 2019
Wednesday 11:57 am
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Who do you need to see to get advised on these sheisty schemes? Some sort of accountant or an inheritance solicitor?
>> No. 7613 Anonymous
10th July 2019
Wednesday 12:53 pm
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Not everyone has enough money for accountants to bother with them I imagine.
>> No. 7614 Anonymous
10th July 2019
Wednesday 1:12 pm
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>>7613

Right, there are always loopholes, it is a question of how much effort it is worth in labour to take advantage of it. If the gain is less than the lawyer/accountants fee, what would be the point?
>> No. 7615 Anonymous
10th July 2019
Wednesday 1:42 pm
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>>7613>>7614
You can do it for free:

>To change a will you’ll need to make a ‘variation’.

>You don’t need a formal document or deed - you can write a letter as long as it meets these conditions.

https://www.gov.uk/alter-a-will-after-a-death

People just pay for the reassurance they've done it right.
>> No. 7619 Anonymous
10th July 2019
Wednesday 5:39 pm
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>>7610
A loan that doesn't need to be repaid? That definitely sounds too good to be true. In fact, HMRC have already made it clear that they do not consider such loans to be legitimate and will treat them instead as whatever they were intended to disguise in the first place.
>> No. 7620 Anonymous
10th July 2019
Wednesday 6:36 pm
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>>7619
>A loan that doesn't need to be repaid?

They're repayable to the trust on death. Trusts can be set up with the power to loan funds to their beneficiaries.

The will is rewritten so that the estate is placed into a trust, their children loan the money from the trust to do with as they please. When they die the amount outstanding is repaid to the trust, which reduces the value of their estate for IHT and the grandchildren are now in control of a trust in to do whatever they please with the money - if the parents had any sense then they'd have written into their wills the option to place part of their own estate in trust.

Are you sure you're not getting muddled up with people using spurious loans to avoid paying income tax like those from Mrs Brown's Boys did?
>> No. 7621 Anonymous
10th July 2019
Wednesday 7:31 pm
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>>7620
>They're repayable to the trust on death.
Or, in other words, they don't have to be repaid. They're spurious loans to disguise a taxable inheritance as a non-taxable loan. The grandchildren will get the inheritance minus whatever couldn't be recovered from the children. If OP is an adult, their parents are likely part of the most selfish generation in modern history.
>> No. 7623 Anonymous
10th July 2019
Wednesday 7:46 pm
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>>7621
>They're spurious loans

Spurious loans that HMRC don't take umbrage with.

>If OP is an adult, their parents are likely part of the most selfish generation in modern history.

Inheritance Tax is a voluntary tax, largely paid by the ignorant and those with no descendants. Only a fool, or someone wealthy enough to know that their kids will be financially comfortable regardless, wouldn't take steps to maximise the amount of their wealth passed on to future generations. Why should dodging IHT only be the preserve of the super rich?
>> No. 7624 Anonymous
10th July 2019
Wednesday 8:48 pm
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>>7623
>Spurious loans that HMRC don't take umbrage with. [citation needed]

>Why should dodging IHT only be the preserve of the super rich?
That's the wrong question. The real question is why, morally, should paying it be the preserve "the ignorant and those with no descendants"?
>> No. 7625 Anonymous
10th July 2019
Wednesday 9:01 pm
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>>7624
>[sup][citation needed][/sub]

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...


https://www.trusts-estates.co.uk/briefing/loans-by-trustees-to-beneficiaries-93911.htm

I haven't seen anything whatsoever that supports your assertion.
>> No. 7626 Anonymous
10th July 2019
Wednesday 9:11 pm
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>>7625
>By stating that this loan can be recalled at any time it isn't deemed to be deliberately depriving the trust fund.
Yes, this is exactly the same wheeze that the other loan schemes were using, and they did not stand up to scrutiny when challenged by HMRC.
>> No. 7627 Anonymous
10th July 2019
Wednesday 9:25 pm
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>>7626
There are various Finance Acts and Trustee Acts which cover what trusts can and cannot do.

Can you provide a case which proves HMRC don't like this? All you've said so far is that they didn't like something else. Should I stop using a knife to cut up food because it would be illegal for me to carry one in public? The police don't like you carrying knives, after all, so it must be the same for everything.
>> No. 7628 Anonymous
10th July 2019
Wednesday 9:36 pm
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>>7627
>Should I stop using a knife to cut up food because it would be illegal for me to carry one in public?
That depends. Are you trying to pass off a machete as an ordinary table knife?

Again, the principle you're advancing, namely that the loan is legitimate because it's repayable on demand, is exactly the same as the one that failed in similar loan schemes where payments were made into trusts and "loaned" to the individual.

At the risk of repeating myself:
>The real question is why, morally, should paying it be the preserve "the ignorant and those with no descendants"?
>> No. 7629 Anonymous
10th July 2019
Wednesday 9:42 pm
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>>7628
The trust is created as a result of the will of the deceased person. It is not created by an individual who then places money into the trust before borrowing it back. There's more than one party involved so it is not exactly the same.
>> No. 7630 Anonymous
10th July 2019
Wednesday 9:52 pm
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>>7629
>It is not created by an individual who then places money into the trust before borrowing it back.
Yes, it is. Go back and read the OP again. Not that it matters, because it also wasn't the same individual in any of the contested cases either.
>> No. 7631 Anonymous
10th July 2019
Wednesday 10:06 pm
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>>7630
>Go back and read the OP again.

The settlor is the grandparent. The deed of variation means that, legally speaking, the trust was created as a result of the will of the grandparent - it doesn't matter at all that it was rewritten after their death. The settlor is not the parent. As far as the powers that be are concerned the money was not received directly by the parent and placed into trust by the parent.

You haven't been unable to find a single case of HMRC successfully challenging a case where someone died and the value of their estate had been reduced by a debt to a trust of which they were not the settlor. This is because it doesn't exist. This is because you're talking out of your arse and are now doubling down.
>> No. 7632 Anonymous
10th July 2019
Wednesday 10:28 pm
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>>7631
>As far as the powers that be are concerned the money was not received directly by the parent and placed into trust by the parent.
Ramsay and Dawson would disagree. You haven't provided anything that would distinguish this sort of thing from what was decided in the Rangers case, other than one of the parties being deceased and the particular tax involved being different (IHT vs IT/NIC). You have asserted that this is mechanically different from the previously challenged schemes, but you haven't offered up anything to back this up.

>You haven't been unable to find a single case of HMRC successfully challenging a case where someone died and the value of their estate had been reduced by a debt to a trust of which they were not the settlor.
It isn't my job to do so. You're the one suggesting it's fine, it's incumbent on you to show us recent cases where HMRC have unsuccessfully challenged the arrangement. Otherwise you're doing the equivalent of saying that until Lost in Care and the Haut de la Garenne affair it was perfectly fine to abuse children in care because nobody had been prosecuted for it.
>> No. 7633 Anonymous
11th July 2019
Thursday 12:03 am
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>>7632
Stop being defensive, mate. Carry on the cunt-off please. I'm learning a lot.
>> No. 7634 Anonymous
11th July 2019
Thursday 6:47 am
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>>7632
>show us recent cases where HMRC have unsuccessfully challenged the arrangement.

That's the point. HMRC haven't challenged the arrangement because they see no need to; the trusts are acting within the powers granted to them by various Acts.
>> No. 7635 Anonymous
11th July 2019
Thursday 9:36 am
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>>7634
Successful challenge to use of a trust to disguise a transaction with loans "repayable" on death:

https://www.supremecourt.uk/cases/uksc-2016-0073.html

You were saying?
>> No. 7636 Anonymous
11th July 2019
Thursday 10:17 am
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>>7635
That's not a will trust, that's an employee benefit trust or whatever else Rangers were up to. Try harder, lad.
>> No. 7637 Anonymous
11th July 2019
Thursday 10:49 am
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>>7636
You haven't read the case, have you?
>> No. 7638 Anonymous
11th July 2019
Thursday 11:34 am
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>>7637
Yes. Rangers employees had their remuneration paid into a trust, which they'd loan back to themselves in the place of income subject to PAYE. The judgement is of the view that the loan payments were really emoluments; although inheritance tax was mentioned I do not see a specific judgement in relation to this.

Furthermore, as pointed out several times, paying money yourself (or having your earnings diverted) into a trust and borrowing that money back to get around income tax is not the same as borrowing money from a trust that you are not the settlor of. Borrowing your own money back and borrowing money that came from someone else are two very different things.
>> No. 7639 Anonymous
11th July 2019
Thursday 4:50 pm
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>>7638
>Borrowing your own money back and borrowing money that came from someone else are two very different things.
In theory perhaps. Not so much in practice, which is what the judgment is getting at. The paper structure goes out the window, and what matters is the net effect in the real world. In one case, someone has money they were intended to receive put in a trust and "borrows" it with no expectation of paying it back, and in the other, someone has money they were intended to receive put in a trust and "borrows" it with no expectation of paying it back.
>> No. 7640 Anonymous
11th July 2019
Thursday 5:08 pm
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>>7639
>someone has money they were intended to receive put in a trust and "borrows" it with no expectation of paying it back.

Except for the will saying that the money was to be put into trust rather than going directly to them, that is.
>> No. 7641 Anonymous
11th July 2019
Thursday 5:16 pm
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>>7640
Ah, yes, the will, which was changed after their death by the beneficiary in order to say the money was to be put into a trust. This is functionally no different from the creation of the EBT. It's just a subtly different set of legal fictions to cover up the same reality.

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