Intergenerational planning: A Paraplanners Guide

In this Online Assembly, we discussed the implications of intergenerational planning paraplanners should be aware of. The topics we covered included:

  • Gifting during life vs gifts made after death
  • Access and control
  • Using the right tax wrappers
  • Trusts
  • Investment strategies

Watch the replay

You can catch up on the Online Assembly here.

Answering your questions

We ran out of time to answer all your questions at the event but Transact’s Brian Radbone has answered them below.

Question 1: Can a DGT be unwound? If so, what are the tax implications?

Answer 1: The settlor’s regular payments must be paid from a DGT unless the settlor foregoes them. Should this happen this will be treated as a PET or CLT by the settlor depending on whether the DGT is a bare or discretionary trust.

The benefits can then be distributed from a discretionary trust by the trustees typically executing a deed of appointment and advancement. If the investment bond is surrendered, then any chargeable gain will be assessed against the settlor or the segments could be assigned to the beneficiaries with them becoming the taxable entities when the segments are surrendered. If there was an initial charge to IHT, there will be an exit charge.

The benefits would continue to be held in a bare trust until the beneficiaries attain majority.


Question 2: Who actually pays the IHT due on gifts that are failed PETs?

Answer 2: The beneficiary is assessed by HMRC on any IHT due.


Question 3: Can nil discount DGTs still be done and are they a good idea?

Answer 3: Nil discount DGTs can still be done. While there is no discount (and no underwriting is required) the settlor still has the right to the specified regular payments from the trust.


Thanks, Brian!