Question one
Is it preferable for inheritance tax purposes to hold business assets within a company, or outside the company and owned by an individual?
A) Outside the company and personally owned
B) Within the company as the business property relief is more beneficial
C) It makes no difference to the owner’s inheritance tax liability
D) Outside the company and in joint names with a spouse
Question two
John is age 60 and is contemplating taking out a flexible unit-linked whole life plan to cover his potential IHT liability. The illustration from the company projects a level premium payable in return for a level sum assured for the whole of his life. He would like to know the most significant risk involved in this type of plan.
A) The fund performance will be less than projected and the surrender value of the policy will therefore be less than expected
B) The company will not be financially strong enough to pay out and the benefits may not be forthcoming to his beneficiaries
C) The value of his estate will rise and the amount of cover provided under the policy will not be adequate to meet the future need for insurance cover
D) The fund performance will be less than the level projected and he will have to increase the premiums or reduce the level of cover at some point in the future
Question three
Gerald wants to put some of his cash into a trust to potentially benefit his children and also to prevent his inheritance tax liability rising. He is concerned about losing access to all of his capital and would like to be able to get back lump sums of money if he needs it. Which is likely to be the most appropriate solution?
A) Discounted gift trust
B) Absolute trust
C) Gift and loan trust
D) None of the above. He cannot get back any money once he has settled it into a trust
Scroll down for answers….
Answers:
1. B
2. D
3. C
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