Inheritance Tax Planning and Trusts and Wealth Protection

Background

A married couple in their mid-50’s sought advice regarding their affairs. Their combined assets amounted to around £1.5 million. Each had a comfortable salary and had significant amount of Life Assurance and large pensions. They had two adult children who they wanted to benefit from their estates.

Our Support

If no planning was carried out and no action taken, the likely Inheritance Tax payable on the death of the clients would be 40% of £500,000, making £200,000 in tax. If they were to gift £500,000 to their children and survive for 7 years, there would be no Inheritance tax payable at today’s values. However, the children were in their late teens and early 20’s and had not settled down, so the clients had concerns about giving the assets outright to them.

Solution

After discussing the assets of the couple, it was clear that they had savings of £500,000. They were also confident that they would not need that money for their future. Our Wills & Probate experts advised that the couple set up a Discretionary Trust and transfer the money into that for the benefit of their children. We also advised them that they could be the trustees of the Trust, so they could still manage when and in what circumstances their children can receive any payments, while, of course, saving £200,000 of Inheritance Tax provided that they survived for 7 years.

If you would like assistance with Inheritance Tax planning or Trusts, please get in touch with a member of our Wills & Probate team via our contact form or over the phone on 029 2082 9100 for a free initial chat to see how we can help you.