There are seven main types of trust listed on the government’s website; CTT Group offers its Private Clients and Professional Advisors a further twelve. All of these have been skilfully developed in-house by the group, and many of them remain totally unique to CTT. With the group’s fresh approach to asset protection and fearlessness in the face of challenging legislation, CTT has been rewriting the estate planning rule book since 2003, one new trust at a time.
Legislation as inspiration
“Anything we do, we do as an organisation,” iterates CTT’s Technical Director Spencer Tattam, who joined CTT in 2005 as a ‘trolley boy’ and has since become an integral part of the group as both a Financial Advisor and innovator. “We have a wealth of different skills throughout the staff. If we’re trying to achieve something new, innovative, and different, we all pull together.”
“Often, it’s inspired by a legislative change kicking in. From that, a lot of the industry seems to close down, whereas, at CTT, we’ll see that change in legislation as an opportunity. As a result, our clients end up being no worse off – and sometimes better off – because we’ve applied our minds to the problem and come up with a better solution than we had before.”
Overcoming RNRB restrictions
The introduction of the Residence Nil Rate Band (RNRB) in 2017 was a particularly challenging piece of legislation that inspired the CTT team to create their RNRB Trusts.
The RNRB was introduced by HMRC to help individuals whose estate exceeds the basic inheritance tax threshold of £325,000. It grants up to an additional £175,000 IHT-free allowance on the value of the estate where the family home is inherited by a direct descendent. But as Spencer points out, this piece of legislation doesn’t support leaving property to trust, something an increasing number of clients are choosing to do as a way of passing on assets while ensuring they remain protected.
“As an organisation, we champion the use of trusts because the best scenario is having the use of something without the encumbrance of owning it,” he explains. “That way, your kids can live in the house, but if they go through a divorce, for example, the house isn’t actually theirs; it’s in trust.”
“This new legislation blew in the face of that. So, we created a trust that would, as far as possible, ringfence against that sort of problem but also allow for the RNRB allowance still to be claimed. The RNRB Trusts are completely unique in their construction and the way they work. It’s not a magic wand, but it gives the clients the very best chance if something goes wrong.”
Tax mitigation trusts
Another clever piece of CTT drafting is their Probate Preservation Plus Trust (PPPT), an asset protection trust that ensures no Inheritance Tax will ever be sought on it, even when assets are put in or taken out.
“A big problem with trusts is there’s often unknown consequences and tax charges that trip people up,” explains Spencer. “A lot of trusts suffer a tax charge when they become 10 years old, and it’s often a shock to clients who didn’t expect it.”
“We’ve created a trust that doesn’t suffer those tax charges because the operative clauses within the document achieve that advantage.”
This is the guiding principle for how CTT handles trusts. Bespoke drafting can create room for error, but Spencer asserts, “With wills and trusts, there needs to be no risk, and we’re clear there.” By using the most appropriate elements of existing trusts together, clients can benefit from a new type of trust without the risk.
This innovative approach to estate planning is one of the defining features that sets CTT Group apart from its peers. Alongside shiny new technological advances like the group’s Legacy software, CTT’s diverse, up-to-date trust offerings enable its advisors to provide clients with more effective, flexible asset protection that aligns with modern-day living. As Spencer points out:
“Events that used to be comparatively rare where assets are being split between separating families are now pretty common. So, it’s really about putting trusts in place that use the best bits of legislation depending on the problem you’re trying to solve.”
And that’s where CTT’s specialism in trust development comes into its own.
“The majority of our consultants have joined us and stay with us because of the way we approach trusts and how we use them for their clients,” Spencer says. “They see our trusts are innovative, and they’re able to offer their clients solutions they wouldn’t get anywhere else outside of central London.”
“But it works both ways. We get exposed to so many different scenarios that we couldn’t come across if we were just seeing clients ourselves because we’ve got a spread of over 2,500 consultants out there, giving us client feedback.”
As well as drawing on insights from its field consultants, the work that goes into creating a new trust comes from the specific blend of expertise that makes up CTT. The group uses its diverse team of financial advisors and estate planners, coupled with 20 years of in-depth industry know-how, to produce its unique solutions. As Spencer says:
“The people who founded CTT, Bob Massey and Clive Ponder, are still the people who run it. They are estate planners and advisors – that’s where they started. The enthusiasm to innovate and drive to improve comes from them. And they know and understand every role within CTT because when the company was a lot smaller, they were doing those roles themselves.”
This culture of shared knowledge between departments is what produces the CTT magic when it comes to innovative legislation and estate planning.
“There’s always a bit of a grey area between legal and financial advice. You go to your solicitor for legal advice, and you go to your FA for financial advice. Then the bits that fall in between, neither are particularly good at. But of course, we’ve got both things here,” Spencer explains.
“There’s lots of innovation that takes place at CTT in that grey area. For example, a client may have standard investments, but we can apply an estate planning trust or principle to those investments in a way that not many other organisations would be able to.”
A balanced approach
Wielding an arsenal of knowledge and experience is nothing without the ability to use it wisely. As effective as CTT is at coming up with new ideas and approaches, the real secret to success when creating trusts and challenging legislation, he says, is knowing how to strike a balance.
“A document is no good if it’s the best at everything it does, but it’s so complicated nobody understands it. That’s completely self-defeating; there’s a balance to be struck. So, first, we push the technical boundaries as far as possible, then pull it back a few notches to make it user-friendly.”
And, as Spencer reveals, pushing boundaries is something CTT doesn’t shy away from.
“The RNRB Trust was horrendously technical when we came up with it,” he recalls. “We had an appointment with [what as] Queen’s Counsel, and she was pretty much the best trust lawyer in the land. When we told her what we wanted to do, she almost fell off her chair! What we created was such a technical thing, but then we got some feedback from consultants and the team here and made it into a workable format.”
In Spencer’s words: “If you don’t keep coming up with ideas, good, bad, or indifferent, then you’re stood still.”
“Sometimes, we come up with some harebrained stuff,” he admits. “But even those can contribute to a conversation. There’s no shame in trying to innovate and failing. Because out of every four failures, you might get one absolute winner.”
And as standing still isn’t in the spirit of CTT, the group already has its sights set on its next legislative innovation.
“HMRC have now brought in compulsory registration of trusts for transparency because trusts are quite a handy vehicle for hiding things,” he shares.
“This new Trust Registration Service applies to virtually all trusts. So, we’re putting some ideas down for creating a trust that wouldn’t need to be reported to the Trust Registration Service,” he reveals. “Not sneakily, but just in a way that it fits within their schedule of rules.”
Watch this space!
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