There are three key rules to follow to ensure that trust investments will be outside the UK IHT provisions.
Your client must not be, or be treated as, UK domiciled when they set up the trust.
The trust fund must comprise 'excluded property' such as offshore bonds and OEICs.
If your client later becomes UK domiciled, or treated as UK domiciled for IHT purposes, your client must not put any further money or assets into the trust.
The trust is set up to run for 125 years. After your client's death, it can be continued, with the assets remaining within it, or it can be wound up by the trustees and the assets distributed to the beneficiaries.
If there is trust property remaining at the end of the trust period, the remaining trust fund will be split in equal shares between your client's children, grandchildren and great grandchildren, who are alive at that time. However, the trustees are free to distribute the trust fund to any beneficiary at any time during the trust period.
If your client and your client's spouse or civil partner are both non-UK domiciled, your client may set up the trust together as joint settlors. Alternatively, they may each set up a trust individually.
The trustees
The trustees will manage the trust and have control over the trust fund investments. Your client will automatically be one of the trustees. If two of your clients are setting up the trust jointly they will both be trustees. There should be at least two individual trustees (or a corporate trustee) and your client can appoint additional trustees in the Trust Declaration form.
After your client's death, the remaining trustees will have considerable freedom to decide who is to benefit from the trust fund. It's important that your client gives careful consideration to the choice of trustees, so that they'll be sufficiently familiar with your client's wishes.
The beneficiaries
The Trust Provisions include a standard list of beneficiaries who will be automatically included as people who may benefit from the trust:
your client,
your client's present, or any future, spouse, widow(er) or civil partner,
your client's children, stepchildren and other descendants,
any spouse, widow(er) or civil partner of your client’s stepchildren and other descendants.
Your client may include anyone else they would like to benefit as an additional beneficiary.
The trustees, at their discretion, can make payments from the trust fund to any of the beneficiaries, including your client, at any time. There's no restriction on when or how payments can be made during the trust period, either before or after your client's death.