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While interest in possession trusts are not widely used any more it is still important that advisers are aware of them says Bob Perkins

Until the Budget and Finance Act 2006, trusts where there was an interest in possession (IIP) were used extensively for inheritance tax (IHT) planning. Transfers (gifts) of assets into such trusts had enjoyed the status of a potentially exempt transfer (PET). For trusts created since 22nd March 2006, that status ceased and they now fall under the regime for chargeable lifetime transfers. That makes them no different, in terms of IHT treatment, to discretionary trusts where no beneficiary has an automatic IIP. What is an IIP? The point of reference for the definition of an IIP used by ...

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