Inheritance Tax: Save £100,000s with simple advanced planning Article Discussion

loulou41

But there are couples who still:

1) wish to protect the home from care fees; Or

Own the property as tenants in common - but instead of leaving estate to spouse outright, leave them a life interest (ie they can continue living in the property/receive income from your estate). Then on death of surviving spouse your share of estate passes to who you want (rather than leaving things to chance).

I want to protect half of my home from care fees. I do not mind my children selling my house to pay for my care fees but my adult son is still living with me and I do not want him to be homeless. I want at least to guarantee him half of the proceed of the sale if it comes to it.

Am I correct, the best way to go about it is to see a solicitor to change the deed to tenants in common and then re-write the will to leave him my share of the home on the first death? My concern is, is the 600k still apply to couple if I do it that way? Thanks

localhero

Yes Loulou,

If you are married with jointly owned property, you can own the property as tenants in common, leave your share to your son or whoever, but a life interest to spouse.

That way when spouse dies they will have 2 x the IHT allowance (as per my post #121).

littlejo67

I need some advice on whether to put my Life Assurance in Trust for my children and general financial issues.

I am taking out a policy for £350,000 - which will pay off outstanding Mortgage and be a lump sum for my husband and children. The property I own has approx a £100,00 value as it was found to be Mundic Block (concrete cancer).
Therefore my Estate will value approx £450,000.

My children are from a previous marriage.
I wish to leave the house to them in Trust and about a £100,00 allowance for there expenses.
I also wish to leave £200,000 to my husband so this will help him relocate- as childrens dad will move into property to raise them.

I have got to the point in the form whether to tick ` put in trust`. I am stumped!
Some of this income is needed for my Husband. How do I avoid I.T?

I also want a plan for the childrens finances if their biological father is raising them.
I do not wish him to be responsible for there income as he is on the verge of Bankruptcy.
How can this best be achieved?

In a few years I will also Inherit a property in the region of £220,000. Plus about £20,000.
It is unlikely that I will die at the same time as my mother but not impossible - we travel together alot.
So this could also come into the equation.

At the moment I am trying to sort out the financial security of my family. Your advice would be greatly appreciated. I have yet to make a will but will do so as soon as my finances are in order. I cant really afford a IFA . Will have to if you lot think it neccessary! Thanks in advance..

localhero

First of all, you and your mother would benefit from some sensible tax-planning incorporated into a Will which can be tailored quite easily to meet your particular circumstances. You will need to appoint 2 trustees in your Will to hold and manage the share of your estate until your children are old enough to inherit.

Secondly if the life policy is not put into trust it will be payable to your estate, which means it could be subject to IHT.

Putting it into trust is probably the way forward, but payable to who? It would be inadvisable to appoint the children's father. Why not the trustees of your Will? You can provide them with directions as to how they manage the proceeds.

I don't think you need the services of an IFA, just a decent willwriter. Visit www.ipw.org.uk for a member in your area who's qualified, regulated and insured.

harryhound

I don't want to confuse the issue with too much detail BUT make sure you understand the tax treatment of trusts for Income tax. Capital Gains Tax, as well as Inheritance tax. There used to be something called an Accumulation & Maintenance trust, but Gordon Brown killed off its major benefit, which allowed the postponement of handing the kids share to them until they were 25, without getting tangled up in extra taxation. Unfortunately trusts that treat children as children, including the Child Trust Fund, now end at 18.

I cannot think of anything more stupid than giving an 18 year old, fresh out of school , a slug of wealth. It destroys enterprise and can be fatal, I have been to two funerals of young people with too much money and too little experience of life.

Harry.

localhero

Yes that's right. This little wheeze was introduced in last year's budget. The new tax charge on these trusts is based on any sum over the nil rate band being liable to 6% every 10 years.

Therefore a fund of £500,000 in trust for 5 years from this tax year would be taxed at £200,000 x 5/10 x 6% = £6000 when it gets paid out to the children.

Call it a 'peace of mind tax' - and I agree, utterly ridiculous.

parkersages

If a trust has a cash sum it is encumbent on the Trustees to maximise the return on it. However very few banks offer deposit facilities. Allied Irish do, does anyone know of any others?

harryhound

Try the building societies.
Presumably you have only two trustee signatories?
The big boys don't really want the hassle and it is a bit difficult for two to sign on the internet, though as a thought:-
I wonder if a personal account on the net that could only feed through to a both-must-sign account would be possible and legal?
I think all that a trustee really needs to remember is that he/she owes a duty of trust to the beneficiaries and this duty stands in front of their personal interests (Eg if you pick a demutualising building society and you have a personal account too - bad luck you don't get both bonuses).
In the case of my late mother, we executors used an account at the former Portman BS to gather together various balances (and then we had to keep it open for the bonus !)

tenuissent

Am I allowed here to mention by name the organisation we are setting up a trust with? They have been immensely patient about explaining to us over and over again, at private meetings in our own home, just exactly what the implications are of everything we are doing and what to avoid. They set up the Trust free of charge (including the meetings) then manage it (we could if we wanted to) in what sounds like a very careful way for an annual percentage that seems rather reasonable to us. It is not a large Trust, not much over 100K.

harryhound

Why not? Its not as though you are just some newbie who has come on here just to post spam, BUT perhaps you should start up a new thread called (say) "managing a trust" and then post a link to it here. That would stop this thread getting right off topic.