Each Trust Is Dated on Consecutive Dates (Re Rysaffe)

Dear

Re:

My instruction was to prepare a Shareholder Cross Option Agreement to most effectively deal with the transfer of the share in the company upon death of a shareholder.

I understand that the original life policy, Shareholder protection, is to be replaced by a series of policies, each to be assigned to a number of shareholder trusts. The death benefit for each policy would be less than the Nil Rate Band.

Each trust is dated on consecutive dates (Re Rysaffe).

Upon death the Trustees of the Shareholder Trusts and/or estate representative exercise an option.

The shareholder trust(s) buys and retains the shareholding.

The deceased’s share then do not form part of the survivors’ estates.

Business Property Relief (BPR) applies to the shareholding, so presently there are no Inheritance Tax (IHT) issues, however should the company be sold at a later date following the exercise of an option under the agreement, then the cash asset remains in the various trusts.

Control can be passed to the relevant shareholder if desired by other trustees resigning from each trust, should this be required as shareholders may no longer have a connection. This leaves a shareholder able to administer their own respective share of cash proceeds following a business sale independently of others.

Periodic and exit charges should not be incurred going forward.

The cash remains outside the surviving Shareholders’ estates and so IHT is mitigated upon subsequent death.

Whilst the company continues to trade and hold shares, any dividends can be distributed to appropriate surviving shareholder, spouse or children for income tax efficiency. Dividend income can be retained, the trust paying no further taxation, the dividend being received net of Corporation Tax and the Shareholders Trusts established as Flexible Power of Appointment Interest in Possession Trusts.

The Will for the deceased directs his shareholding to a number of Discretionary Trusts settled on different dates. BPR applies to the deceased assets, X Ltd Shares. The cash received is directed to the trusts and so remains outside the spouse or other beneficiaries estate.

Assets are protected and IHT free for subsequent generations upon death of spouse or the beneficiary.

The pilot trusts assist us to avoid periodic and exit charges going forward.

I trust this assists you in understanding the arrangement.

Yours sincerely