Settlor Excluded Trusts
This is a very useful product where you wish to gift an asset to your children to avoid Inheritance Tax after 7 years. The problem often is that the asset has gone up in value and the gift to your children will trigger a Capital Gains Tax liability which you don’t want to pay. Also you don’t want to lose control of that asset. And you don’t want your asset to be part of your children’s estate and perhaps create an Inheritance Tax liability for them.
The solution is to set up a Settlor Excluded Trust and transfer the asset to that Trust. You will normally be the Settlor and a Trustee and therefore retain control of that particular asset. You will have no benefit from the asset but it will be out of your estate for IHT after the 7 year period.
Accordingly you can benefit from Holdover Relief so that the Capital Gains Tax is not payable until the Trustees eventually sell or transfer the asset.
There are of course traps for the unwary but this product works well if you are guided by a company with the necessary experience. McClure has that experience.