Trust and estate planning and advisory practice
What the exam tests
Planning and advisory practice tests the process of turning client objectives into a workable will, trust and tax plan. It rewards structured fact-finding, capacity checks, risk analysis and monitoring, not a list of products.
Process and tools
Begin with objectives, family circumstances, assets, liabilities, income needs, health and capacity. Identify the tax exposures (IHT, CGT, income tax) and the non-tax objectives (protection, control, succession, philanthropy). The plan may combine wills, lifetime gifts, trusts, insurance, business relief and agricultural relief, pensions and charitable legacies. Business relief can remove 100% of the value of unquoted trading company shares from IHT after two years' ownership; agricultural relief can do the same for agricultural property. Both are subject to detailed conditions and excepted assets.
Worked example
A widow owns a trading company worth £3m, quoted investments of £800,000 and a home worth £700,000. She wants income and to leave the business to her son. The company shares may qualify for 100% business relief if the conditions are met, so the IHT exposure is mainly the investments and home. A plan might include lifetime gifts of investments, a flexible will with a nil-rate-band discretionary trust, and insurance to fund the IHT on the non-relieved assets. The advice must test whether she can afford the gifts and whether the company is trading.
Traps
Assuming business relief applies automatically; ignoring the two-year ownership rule; recommending a trust without checking the settlor's need for access; and failing to review after a sale of the business, which can destroy relief.