In the third of a series on adviser charging, Jeremy Pearson, technical support manager at Canada Life, tackles the issue of making an interest-free loan to trustees.
So far in this series of articles, we have looked at the situation with adviser charging for an investment bond and a discounted gift trust. Now let us consider the peculiarities of making an interest-free loan to trustees. The initial consultation is with our client, Patrick McCoy, who is concerned about inheritance tax (IHT). However, he is not concerned enough about it to make an actual gift; because he is not yet retired, he wants full access to his capital. His adviser recommends he sets up a trust and, rather than make a gift, he lends a cash lump sum to his trustees. The truste...
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