Quilter 3 There are a number of ways you can plan your finances to help reduce your IHT liabilities. Typically, they involve removing money from your ‘estate’ (the total value of your assets) at least seven years before you die. One way to help mitigate IHT is to put an investment into a trust. Any growth in value on the investment that you place in the trust is immediately outside your estate for IHT purposes and, if you survive for seven years after setting it up, the value of the original investment will not be liable for IHT. What is a trust? Simply put, a trust allows you, ‘the Settlor’, to entrust your assets, which then become known as the trust fund, to your appointed ‘trustees’. The trustees then become the legal owners of the trust fund and it is their responsibility to control, manage and ultimately distribute the trust fund to the ‘beneficiaries’. You can appoint individuals as trustees, or you can choose a corporate trustee. Certain trusts not only allow you to pass on your wealth when you die, but can also give you regular access to capital when you are alive. However, with trusts designed to achieve a tax benefit, you usually have to forgo access to some of the original capital as well as any capital growth. That’s where the Lifestyle Trust can help. The following pages explain how the Lifestyle Trust can be used for inheritance tax planning with a Collective Investment Bond. Planning for inheritance tax Inheritance tax (IHT) used to be a concern for only the very wealthy but these days many more of us need to consider how to deal with it.