What's the best way to leave money to your childrenchildren?

JethroUK

What's the best way to leave money to your childrenchildren?

Is it a good idea to start a trust?

Excuse the mobile web bugs

Keep_pedalling

That would depend on a number of factors. For starters how old are the children? What is the value of the estate?

BobQ

The simplest way is to leave it to them in your Will. But there may be good reasons for using a Trust.

With a Trust you can put money into it during your lifetime and in your Will so it may have tax advantages for a larger estate. But you need to realise that money put into Trust belongs to the Trust. If done in your lifetime the money or other asset is no longer yours.

The Trustee must use the money in accordance with the rules of the Trust.

If you only put assets into a Trust at the time of your death by your Will, your Trustees will spend the money as you directed in your Will, and at their discretion if you give them that authority. But a Trust limits what your children can do as beneficiaries of the Trust.Say you decide that the trust will pay them a fixed sum of £10K a year and they want more they either will not get it or will only get it if you have granted the trustees that discretion and they agree.

Establishing a trust is good for a larger estate if the children are incapable of managing the inheritance, are likely to be wasteful with the money if left to them outright or are married to people you do not trust.

Also it is difficult to change a Trust after it is set up.

Also remember that a Trust has ongoing costs associated with it, particularly with professional trustees.

getmore4less

BobQ wrote: »

The simplest way is to leave it to them in your Will. But there may be good reasons for using a Trust.

Which creates a rust if they are minors.

BobQ

getmore4less wrote: »

Which creates a Trust if they are minors.

OP does not say what age the children are, I was assuming they were adults but you are correct if they are minors a Trust happens by default.

gibson1

JethroUK wrote: »

What's the best way to leave money to your childrenchildren?

Is it a good idea to start a trust?

Excuse the mobile web bugs

An estate of less than £325,000 is tax free.

Over £325,000 and it gets taxed at 40% after the £325,000.
You could give it to them now and its tax free providing you live another 7 years, sliding scale in the meantime.

Anything you leave to your wife/husband is tax free. If one were to leave everything to the other and vice versa, the tax free bands for the individuals get combined, so £650,000 could then be passed on in a will, tax free.

One or both of the above methods is the way out of it. Trust funds I don't know about.

getmore4less

gibson1 wrote: »

An estate of less than £325,000 is tax free.

Over £325,000 and it gets taxed at 40% after the £325,000.
You could give it to them now and its tax free providing you live another 7 years, sliding scale in the meantime.

Anything you leave to your wife/husband is tax free. If one were to leave everything to the other and vice versa, the tax free bands for the individuals get combined, so £650,000 could then be passed on in a will, tax free.

One or both of the above methods is the way out of it. Trust funds I don't know about.

Only to the part of gifts that go over the nil rate band, there is no sliding scale for smaller gifts.