How to mitigate Inheritance Tax By The Duke of Westminster

Posted by siteadmin on Tuesday 6th of September 2016.

This is not a book currently available, but if it were it would be a bestseller!

Gerald  Cavendish Grosvenor , the sixth Duke of Westminster, died on Tuesday 9th August. He left a wife and four children. His estate is assumed to be worth around £9bn, and after the standard nil rate band allowance of £325,000 the tax liability could be expected to be in the region of £3bn. But we don’t expect the Treasury to receive anything like this amount. You see the Duke (and his forebears) understood very well how to mitigate tax and keep the wealth in the family.  How did they do it?

Discretionary Trusts hold the bulk of the family wealth, and this means there are no specific beneficiaries. There are classes of beneficiaries and potential beneficiaries, all of whom can benefit in the form of capital appointments and/or income, at the discretion of the trustees. But there is no one on whom falls the burden of Inheritance tax.  

Grosvenor’s first born son Hugh inherits the title of Duke of Westminster but he won’t ever own the estate in the accepted sense. Instead he will be given the responsibility to control the estate within the trusts for the benefit of the family, and in due course that control will probably pass down many generations to come.

But you don’t need to have a very large estate to benefit from estate tax planning. As there are several legitimate ways of avoiding IHT it is easy to understand why it is often referred to as avoluntary tax.

While the NIL Rate Band of £325,000 per person can be topped up by the  Additional Property Nil Rate Band of £175,000 per person giving a total of £1m free of IHT on joint estates, this additional relief for property will be phased in between 2017 and 2021 so is not available in total just yet.   If you would prefer your estate to not pay this voluntary tax then you need to have plans in place.  We are here to help.

Your Wealth Matters

Archive