I have a will trust established 5 years ago. The inital asset was £600,000 cash. The trustees now want to distribute all assets to 50% charity and 50% individual beneficiaries. As the assets to the charity are non-relevant property, I think it should be £600,000 less charity exemption £300,000 = £300,000 chargeable less nil rate band £325,000, so no IHT exit charge on the assets to the individual beneficiaries.
However, someone has suggested that it should be £600,000 less nil rate band £325,000 = £275,000 chargeable assets. So, IHT at 20%, £55,000, effective rate = 9.166%, actual rate 30%x 20/40 quarters = 1.375%. IHT exit charge to charity would be £300,000 less charity exemption = £0 but individual beneficiaries would be £300,000 x 1.375% = £4125. Similar to how BPR/APR is applied in the first 10 years.
Thank you in advance.