Family investment companies (FIC) attempt to mirror the advantages of discretionary trusts and offer the founder a means to transfer value to other family members while still exercising an element of control. A family investment company is a flexible vehicle for managing family wealth and enables the tax-efficient accumulation and distribution of profits among family members. This makes them popular and worth exploring as part of your estate planning.
When a FIC is incorporated, shares can be gifted to family members without incurring any immediate charges on the basis that they have little or no value at the date of incorporation and therefore there are no concerns with capital gains tax. The gift of the shares will be treated as a potentially exempt transfer (PET) for inheritance tax and therefore outside the estate of the donor, provided they survive at least seven years. If the donor dies within seven years, it will be the value of the shares at the date of the gift, rather than at the date of death, that is brought into their estate and subject to inheritance tax.