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The Excluded Property Trust (EPT)

Contributed by Fiduciary Group
04 August, 2016

Key Points & Benefits of Considering an EPT Established in Gibraltar

An Excluded Property Trust is brought into being by a valid and legally binding Trust arrangement ("Deed of Settlement") by which a person, not domiciled in the UK (or UK deemed domicile), is able to protect overseas assets from a future UK Inheritance Tax (IHT) liability should that person become domiciled or deemed domiciled in the UK. At the time of writing a non UK domiciled person will automatically acquire a "deemed domicile" in the UK after 15 years of residence.

Key Points:

An EPT is a useful means by which such a person as mentioned is able to protect assets for the purposes of wealth preservation, succession planning and simplification of the process of Probate. Once a non-domiciled person settles assets into an EPT and this is done before they acquire UK deemed domicile, those assets will sit outside that person's personal Estate and therefore not be included in any calculation of IHT.

Any trust must be settled for the benefit of specific persons or classes of persons and provision can be made in the Trust Document to include not only charities, or other organisations but also future generations of persons as yet unborn. For example: the beneficiaries may be described as "my children, their children and remoter issue"

For those individuals who wish to provide for the future financial affairs of their children, family members, causes or other persons, they are able to make provision for this knowing their wishes (by means of their Letter of Wishes addressed to the Trustees) will be taken into consideration when a distribution by the Trust is considered.

Once assets are settled into this type of Trust any distribution made will not be seen as a "gift" and so falls outside the 7 Year Rule. In addition, a distribution from a Trust can be made with conditions or other qualifying provisions without falling under the rules governing "Gifts with reservation of benefits"; i.e., where a gift from person to another is given with conditions attached whereby it is considered that the donor is keeping some form of benefit to themselves and making the gift absolutely, it is likely that such a gift will continue to be considered as part of the donor's estate and in time be included in any IHT calculation.

The Benefits of Considering an Excluded Property Trust Established in Gibraltar.

Gibraltar provides a well-regulated and therefore secure jurisdiction in which to establish a Trust. Based upon the common law of England and Wales, Gibraltar trust legislation provides a robust legal framework within which a Trust is established while at the same time, in common with the UK Crown dependencies, UK overseas territories and a number of UK countries within the Commonwealth, allowing for leave to appeal to London and The Privy Council, the ultimate independent court for these jurisdictions in the United kingdom. Recently the Perpetuity Period has been increased to 250 years.

A Trust can be established in a simple and cost effective manner with any future amendments being allowable without the need for complicated and costly legal intervention.

The Benefits of Considering Fiduciary Trust Limited as Trustees.

Fiduciary Trust Limited is licensed and regulated by the Gibraltar Financial Services Commission (GFSC) to provide professional trustee services; it is a part of the Fiduciary Group of companies based in Gibraltar. As a licensed and regulated corporate trustee, Fiduciary Trust Limited ensures the highest levels of professional care in providing trust services giving the client the reassurance and comfort that the Trust will be administered year after year and for the benefit of successive generations.

For more information please contact Andy Lyons at: trusts@fiduciarygroup.com


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