An IPDI or Immediate post-death interest trust is used for inheritance tax planning. IWC can include a clause within your will that enables the executors to place the entire estate into the IPDI trust. There are many advantages to this, to find out more about how you can use this method to mitigate inheritance tax liability call us free on 0800 612 6105.
How Does an IPDI Trust Work?
Immediate Post Death Interest (IPDI) Trusts are a way of limiting tax and safeguarding beneficiaries. When combined with pilot trusts, it is very possible to mitigate a married couples` entire inheritance tax bill.
The trust would be for the benefit of any surviving spouse so as such, there would be no inheritance to tax pay on the death of the first spouse. In addition, under current IHT laws, the first spouse`s nil rate allowance would remain intact and could be utilised on the death of the second spouse.
Over the remainder of the surviving spouses` life, the executors could use powers written into the Will to transfer funds to pilot trusts, set up before the first spouse passed away. In order to mitigate the entire IHT liability, you would need to create one pilot trust for every £325k (current nil rate band) over £650k (twice the NBR).
As pilot trusts are managed to remain under the nil rate band, there would be no annual or exit charges. Provided the second spouse lived more than 7 years from the date of the transfer of funds, the money would escape the Potentially Exempt Transfer rules. Therefore, it would not be recalled into the second person`s estate when they died. The entire estate could be held in the pilot trusts and the IPDI could be depleted until there was only £650k held.
On the death of the second spouse the trust would then pass to the next line of beneficiaries. Assuming there was no more than £650k, there would be no inheritance tax to pay because the estate would still benefit from 2 nil rate band allowances.
If you would like any more information about IPDI or pilot trusts, call us free on 0800 612 6105.
IHT Efficiency with IWC
IWC are specialists in will writing and inheritance tax law and mitigation. A highly qualified legal professional from IWC can look at your circumstances and advise you on how to plan your estate to achieve optimal outcome for your loved ones.
Another aspect to consider is that an IPDI is not included during an assessment of wealth. Therefore, as well as the benefits mentioned above, it will prevent the surviving spouse having to spend thousands on health care, in the event they have to go into a residential home. This means the estate will be protected for the beneficiaries.
Estate planning, inheritance tax and nil rate bands are complex, especially where trusts are involved. IWC can arrange everything on your behalf at a home visit including:
To book your consultation, or to speak to advisor about IPDI trusts, call us on 0800 612 6105.