A client is looking to wind up a discretionary will trust which holds the deceased's share in a trading partnership.
I assume that exit charges will arise on apportionments to beneficiaries. Would I have to ignore any BPR in calculating the exit charge?
Also the value of the business has increased over the year. I'm assumnig it would be best to hold over any arising gain? I also assume the trust wouldn't qualify for Entrepreneurs' Relief?
Is there anything i'm missing? Would it be better for the business to be sold to the beneficiaries using IOUs to keep their estates' values down?
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Exit charges
You can have APR/BPR on an exit charge, based on the holding/entitlement by the trustees.
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as mentioned earlier, BPR could still apply to the transfer of the chargeable trust assets.
given that the transfer is chargeable to IHT, a holdover election is available (s260) so that no cgt would be payable. Beneficiaries inherit base costs as date of death of original partner.
given time, bpr should still be available to the beneficiaries assuming they satisfy all the normal criteria, so no need to worry about their own estate getting lumbered with a chargeable asset for IHT. If amounts are substantial and depending on other assets held, you could I suppose take out a two year term assurnace policy to cover the eventaulity that ownership is not met. not my area though, best to run this past a capital taxes / trust expert.