BR Guide Second Edition

62 CASE STUDIES Additionally... £540,000 ALEXANDRA BUYS THE SHARES FROM THE TRUST SO SHE OWNS THE SHARES AND THE TRUST HOLDS £540,000 CASH BR Qualifying Potentially (and assuming the company continues to meet the relevant conditions) a further claim for BR could be achieved by Alexandra if she buys the shares from the trust There is an IHT liability of £365,600 on Alexandra’s death (£3.04 million less £540,000 successfully gifted into trust, less £746,000 NRB, less £300,000 RNRB, less £540,000 subject to BR leaves £914,000 subject to IHT @ 40% = £365,600 payable)*. *This does not consider possible CGT and other costs relating to share transactions. +£216,000 IHT SAVING WHEN SHE DIES 63 CASE STUDIES Item Value (No estate planning) Value (Simon leaves his shares to discretionary trust) Value (Alex buys Simon’s shares from discretionary trust) Value (Alex puts purchased shares in trust) UNLISTED SHARES £540,000 £540,000 £540,000 £540,000 PROPERTY £1,600,000 £1,600,000 £1,600,000 £1,600,000 OTHER ASSETS £900,000 £900,000 £900,000 £900,000 TOTAL ESTATE £3,040,000 £3,040,000 £3,040,000 £3,040,000 NRB AVAILABLE £746,000 £746,000 £746,000 £746,000 RNRB AVAILABLE £30,000 £300,000 £300,000 £400,000 ASSETS REMOVED FROM ESTATE (IN TRUST) £0 £540,000 £540,000 £1,080,000 IHT FREE ASSETS £540,000 £0 £540,000 £0 TAXABLE ESTATE £1,724,000 £1,454,000 £914,000 £814,000 IHT PAYABLE £689,600 £581,600 £365,600 £325,600 RESIDUAL ESTATE £2,350,400 £2,458,400 £2,674,400 £2,714,400 ALEXANDRA AND SIMON’S PLANNING OPTIONS ( * ) If Alexandra places the shares in the discretionary trust Additionally... after two-year qualification period There is an IHT liability of £325,600 on Alexandra’s death. (The outcome is £3.04 million less £540,000 successfully gifted into trust, less £540,000 of BR qualifying shares in trust, less £746,000 NRB, less £400,000 RNRB, leaves £814,000 subject to IHT @ 40% = £325,600 payable). RNRB taper: £1 RNRB lost for every £2 of estate value over £2,300,000 RNRB available = £400,000 No RNRB taper So, full £400,000 of RNRB remains available £1.6m PROPERTY £360,000 OTHER ASSETS ALEXANDRA’S ESTATE: £1.86M £1.08 million total taken outside estate £540,000 BR QUALIFYING SHARES £540,000 CASH FROM ALEX’S PURCHASE OF SHARES