I have been asked if I will prepare a DoV to create a Discretionary Trust which will then make an interest free loan to the daughter of the deceased (D) varying their absolute interest (75% of residue - approx £450K). They also want me to draft the loan agreement. The instruction is from an IFA via a Legal Services company I often deal with. I am not advising D, or dealing with the estate.
A is relatively wealthy. The IFAs thinking is this will allow D to have full use of the funds then create a debt in her estate on her death re: IHT. The DT in the DoV would include D, her daughter and daughter’s issue.
Although I understand the reasoning, will this actually work, particularly in view of the FA 2013. I have read IHTM28027 and 28029 so would the lack of commercial nature to the loan scupper the plan. It also seems too easy to me, in a “too good to be true” way.
Comments and guidance appreciated as always