I am instructed to draft a DOV to an estate whereby the Will of the deceased held an IPDI for the girlfriend (which she is giving up), and a Business Property Relief Discretionary RPT which benefits the family as a whole (being the girlfriend, the decd’s children and grandchildren). I’ll call this the BPR Trust.
The BRP trust says the trust will include all BPR assets, and the inheritance tax exemptions from the dec’d which will consist of a small bit of his remaining NRB, and his late wife’s NRB. There are minimal BPR qualifying assets held in the estate.
The DOV is going to settle a company from the dec’d estate (which does not qualify for BPR) into trust for the grandchildren, subject to a share of the IHT and estate admin costs.
My question is, what is the best way to do this?
My understanding is that the BPR trust cannot be varied, but rather must be appointed out. The objective is for the trust to hold all the company shares, and no other assets. This is tricky because the BPR Trust currently holds NRBs and these are excess to what it is agreed the trust should contain.
I think what i’d have to do is resettle some of the contents of the BPR Trust into another trust (we will call this the “New Trust”), and appoint the other assets out to the BPR Trust to those agreed beneficiaries. Would the implications of the resettling of the BPR Trust assets into a new discretionary trust be that the trust assets that are settled into the New Trust are seen as if that trust existed from the DOD? Where would one find a precedent for something like this?
Another question I have is that two of the benes own shares in the company in their own right, and wish to gift these to the New Trust to increase the value of the trust for the grandchildren. Would it be silly to settle this all in the New Trust? Would it be better if those external shares were settled into two separate lifetime trusts? From a NRB perspective, exit charges etc, would this be a nightmare or a better solution than having 3 trusts for one asset (the company)?
For context, neither of those looking to settle their shares into the New Trust have made any CLTs in the last 7 years.
I’d be grateful for your thoughts.