BPR and Discretionary Trust

Trusts Discussion
1

Hello all.

We are acting for a client who has 2 businesses, one attracting BPR and one which does not. He also owns a residence (amongst other things). He is unmarried but has a partner. We would usually pass the BPR assets into a Business Discretionary Trust so as to harness the relief and secure a lesser IHT bill on the second death should the business be sold prior to the second death. In this instance the client wants both businesses and his residence in a DT. Would you create a separate DT for the BPR assets or put everything in one? I am unsure on the tax implications of putting everything in one… practically I can see pros and cons for both 2 trusts/1 trust…

Thank you for any help you can give, it is much appreciated.

Patsy

2

I think you can use a single discretionary trust.

The usual concern would be to avoid the potential for ‘interaction’ if a person were also making gifts to a spouse or to charity (including gifts post-death from a discretionary trust that would be ‘read back’ under s 144). If that will not be relevant here then I think you can use a single trust.

Paul Davies
Clarke Willmott

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