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Pilot
A pilot trust is a vehicle for assets (usually money) to be received in the future. Pilot trusts are usually created for tax mitigation to reduce as much as possible the tax payable.
An example of a situation where this could be appropriate would be a husband with a large pension death benefit.
He wants his widow to benefit in a tax efficient way. He creates a pilot discretionary trust (also sometimes referred to as a spousal by-pass trust). His widow and children are potential beneficiaries. He nominates the pilot trust to receive the pension death benefit.
On his death, the pension death benefit is paid into the pilot trust for the benefit of his widow and children. As it is in a trust it sits outside his widow’s estate for inheritance tax purposes. (IHT)
When his widow dies, the pilot trust fund is ignored when calculating her IHT. This results in a tax saving of up to 40% of the value of the pilot trust fund.
It is important to consider all of the legal, practical and tax implications before creating a trust. At Hart Brown our experienced team will guide you through the implications and help you set up a trust that best suits your objectives. We can also act as trustees of the trust.
To speak to someone who can advise on pilot trusts or any other type of trust call, email or request a call back from one of our specialist lawyers.
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