Family investment companies (often abbreviated to “FIC”) have become a popular inheritance tax planning tool in recent years. These normally have two classes of shares often called “frozen shares” and “growth shares”. Generally a family’s older generation can look to establish the FIC whereby the growth shares are gifted to the younger generation and whilst the frozen shares are retained.
An interest free loan is then made available to the FIC to invest meaning that any future growth in value of those investments will be reflected in the shares held by the younger generation.
In many cases it may be possible to gift the growth shares to a trust which can further increase the inheritance tax benefits.
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