Unleashing PETs will incur 20% tax charge

Before the Finance Act 2006, anyone who did not want access to capital could set up a simple gift trust, from which they were excluded from being a beneficiary. This was as simple as IHT planning got, because the transfer into trust would be a Potentially Exempt Transfer (PET), so the gift would fall outside the settlor's estate after seven years. The benefit of the trust was that the person setting it up could control who received the benefits, and when. Under the new regime, however, the creation of any flexible lifetime trust will fall within the relevant property regime. This means gi...