iTrust Home Shield
Property Value & Inheritance Tax Planning
Key Features of iTrust Home Shield
iTrust Home Shield is designed for homeowners whose property represents a significant part of their estate and who want to begin lifetime inheritance-tax planning around that value. Depending on your objectives, the planning can use a Fixed Value Financial Interest (FVFI) over a defined amount of property value or, where appropriate, transfer the full legal and beneficial title to the Trustees.
Benefits
Property Value & IHT Planning
Home Shield is designed to make a genuine lifetime transfer of residential property value for inheritance-tax and family-succession planning. The value and tax treatment of any transfer depend on the route selected, the property, previous gifts, available allowances, continued occupation and the applicable tax rules.
Joint Ownership & Mortgage Review
Home Shield can be considered for jointly owned or mortgaged property, but the existing beneficial ownership, mortgage terms, lender requirements and the amount attributable to each owner must be reviewed before implementation.
Sale & Replacement Property
Home Shield can remain workable if the property is later sold, but the process depends on the route used. An FVFI may be substituted onto a suitable replacement property only through the approved substitution process. Where the Trustees own the full title, the sale proceeds belong to the trust and the Trustees may consider acquiring replacement property for the Beneficiaries.
Property Ownership Beyond Death
Where the Trustees already own the full legal title, that trust-owned property does not ordinarily need to pass through your estate merely to establish your executors’ title to it. Under an FVFI, however, the registered title may remain in your name and can still require estate administration after death. The Trustees’ FVFI rights continue despite that administration.
Lifetime IHT Planning
Transfers into Home Shield are reviewed as lifetime chargeable transfers. Where the amount transferred falls within the available nil-rate band and other reliefs, there may be no immediate lifetime IHT to pay. The seven-year period remains relevant to the donor’s death-tax position, but the trust itself remains within the relevant-property regime.
RNRB Review
Because Home Shield deals with residential property, we review how the proposed lifetime transfer may affect the residence nil-rate band and the wider estate. The residence nil-rate band is a death-estate relief and is not available against the lifetime transfer itself.
Two Property Planning Routes
Home Shield can be structured in two ways. An FVFI allows you to make a lifetime gift of a fixed beneficial capital interest calculated by reference to your property while the registered title can remain in your name. Alternatively, where appropriate, you can transfer the property itself to the Trustees. Your adviser will explain the different occupation, tax, mortgage and probate consequences before a route is selected.
Fixed Value Financial Interest (FVFI)
Where you wish to retain the registered title to your home, an FVFI can be used to make an immediate gift to the Trustees of a fixed beneficial capital interest supported by the property. You retain only the rights expressly left outside the gift, while the gifted amount is no longer available for your personal use.
Where the FVFI route is used, legal title and the separately retained occupation rights may remain with you, subject to the terms of the FVFI documentation and ongoing tax review.
Where you continue to occupy the Reference Asset, Gift With Reservation and Pre-Owned Assets Tax must be reviewed. The arrangement is intended to create a lifetime transfer but a particular inheritance-tax outcome cannot be guaranteed.
Option to Transfer the Property Itself
Where appropriate, Home Shield can instead be structured so that the full legal and beneficial title to the property is transferred to the Trustees. This is a genuine transfer of ownership and requires conveyancing, lender and Land Registry steps. If you intend to continue living in the property after transfer, the occupation arrangement and its inheritance-tax consequences must be separately reviewed.
If the property itself is transferred to the Trustees, you do not retain an automatic right to live there. Continued occupation must be separately agreed and, where an IHT objective is being pursued, may require genuine full-market terms and ongoing review.
If you transfer the property itself to the Trustees but continue to occupy it without full consideration, the Gift With Reservation rules can cause the property to remain treated as part of your estate for inheritance-tax purposes. Where continued occupation is intended, the arrangement must be separately reviewed and documented.
Additional Features
Included with your trust at no extra cost
Shield Your Home Today
Property Tax Review
Before implementation we review the Capital Gains Tax, Principal Private Residence, hold-over-relief and land-transaction-tax position for the proposed route. A transfer can have tax consequences even where no cash changes hands, and the future tax treatment of trust-owned property can differ from personal ownership.
Home Shield can be considered for jointly owned or mortgaged property, but the existing beneficial ownership, mortgage terms, lender requirements and the amount attributable to each owner must be reviewed before implementation.
Getting Started
Speak with your iTrust Adviser or contact iTrust121 to explore your options and see how iTrust Home Shield could help you pass on your wealth efficiently and securely.
Contact UsFrequently Asked Questions
Does this guarantee HMRC will never question the arrangement?
No responsible adviser can promise that HMRC will never examine a transaction.
The strength of the arrangement lies in clearly identifying what has been retained and what has genuinely been settled and then administering the structure consistently with those documents.
Why is the valuation important?
Because the fixed amount should be supported by reliable evidence of the property's value and available equity when the settlement is made.
What happens if I have a mortgage?
The secured lending is taken into account when determining available equity.
The lender's security continues to have priority under its mortgage arrangements.
Can I still sell my property?
Yes.
The trust does not exist to stop normal life.
The relevant trust interest simply needs to be dealt with correctly as part of the sale.
Can I remortgage?
Potentially.
Additional secured borrowing affects the equity supporting the trust interest, so the proposed transaction should be considered before completion.
Why do the trustees need to know?
Because property transactions can directly affect the interest held for the trust.
Advance notice allows the transaction and the estate plan to work together.
Does having a lifetime trust remove probate completely?
Not necessarily.
Assets already belonging to the trust continue under the trust.
Assets still personally owned may still require estate administration and a Grant.
Important information
Important information: The benefits described are general illustrations of how the relevant iTrust may operate when appropriately structured and funded. Actual legal, tax and asset-protection outcomes depend on individual circumstances, the assets involved, the terms of the trust and any supplemental instruments, effective implementation and applicable law at the relevant time. Trustee decisions remain subject to the trust deed and their legal duties. Tax treatment and protection from third-party claims cannot be guaranteed and specialist advice may be required.
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