Pilot trusts are trusts set. up during your lifetime and which receive property on your death via a specific legacy in your Will. They can also be used to receive death in service benefits, or a sum assured from a life insurance policy.

If you have a substantial estate, you may wish to consider creating multiple pilot trusts simply to increase the availability of nil rate bands across the trusts. This would have to be offset by the increased administrative workload and compliance requirements that multiple trusts would involve.

Example. Consider the grandparent leaving £600,000 on trust for her three grandchildren at 30. Following the Finance Act 2006, the trust shall be subject to ten-yearly IHT charges and a final I HT exit charge. If the grandparent had created three pilot trusts (each set up on separate days) and left the trustees of each £200,000 then each trust would have its own nil rate band going forward and significantly reduce the overall IHT exposure. The £200,000 is well below the prevailing nil rate band.

When looking at pensions, death in service benefits or life insurances, using pilot trusts to ‘bypass’ your surviving spouse or partner works to lower the value of your joint estate without negatively impacting on the life of your surviving spouse or partner. Talk to your Lifetime Trustees Estate Planning Consultant to find out more about lowering your IHT exposure using pilot trusts.

How to set up a Pilot Trust?

Pilot Trusts can be set up easily and quickly and it can be done at the same time as you draft your Will. You will need to register your trust with HM Revenue and Customs (HMRC) but only if it becomes liable for any of the following:

  • Capital Gains Tax
  • Income Tax
  • Inheritance Tax
  • Stamp Duty Land Tax or Land and Buildings Transaction Tax in Scotland
  • Stamp Duty Reserve Tax

The pilot trust documents can therefore be stored with your Will until such time as it is needed.

Having said all that, it’s actually very simple – just call, text or e mail to Graham on:

Phone: 0798 883 0691 or e-mail: kent@lifetimetrustees.com

Contact here or write to

Lifetime Trustees Ltd.  71 Heathlands, Hastings TN35 4QZ

I will help you every step of the way.