Is there any reason why money cannot be part lent to trustees of a pilot trust and part gifted? E.g. if £500K is settled, can £325K be by way of cash gift and £175K by way of loan made by the Settlor? My understanding is that even if the gross value of the trust is £500K, the net value would still be £325K and not in excess of the LCT limit. For the purposes of this question we assume that the trust deed includes the usual admin provisions including power to borrow.
If following (1) above, is there any reason why the Settlor cannot at some point gift / assign the benefit of the IOU note - so that the debt is owned by another? If so, presumably the assignment or gift of the debt is a PET? Any such transfer would not necessarily be contemplated at time of gift into trust.