This Ain't No FLiPping Trust

It is common knowledge that trusts are ideal wealth planning structures for families as they allow the settlor to assign the economic value of assets to family members while reserving control to trustees or retaining it themselves. The assets are therefore protected for, and in many case from, family members presently and for future generations.

Persons who are domiciled or deemed domiciled in the UK and who settle trusts for the benefit of non-charitable objects such as their families are subject to punitive upfront charges to UK inheritance tax ('IHT') – at rates of 20% initially and then of up to 6% every 10 years, and on the extraction of value from the trust.

An alternative solution that accomplishes a family's goal of separating economic value from control can be achieved by placing assets in a Family Limited Partnership ('FLP'). An FLP is not a settlement for IHT purposes and is not subject to the upfront and ongoing charges. Transferring value to family