Trusts are a win­ner in the fu­ture gen­er­a­tion game

Sunday Herald - - ADVERTISING FEATURE: IFA - Con­tact Keith Miller on 0141 222 2322 or keith@cap­i­tal­man­agers.

IN­HER­I­TANCE Tax (IHT) is widely re­garded as a form of vol­un­tary tax. “The Nil Rate Band is cur­rently at £325,000 and has been since 2010,” says Keith Miller of Cap­i­tal Man­agers. “But from April 2017 we saw the in­tro­duc­tion of a ‘fam­ily home al­lowance’ in ad­di­tion to the Nil Rate Bond, which ef­fec­tively in­creases the NIL Rate Band per per­son by £100,000. This will steadily rise to £175,000 by 2020 giv­ing in­di­vid­u­als, in the­ory, the abil­ity to dis­trib­ute as­sets up to £500,000, pro­vided their main res­i­dence forms part of this. The IHT rate re­mains at 40 per cent of as­sets above this value.

“IHT plan­ning is not just about re­duc­ing the im­pact of IHT on your es­tate; it is about en­sur­ing the right peo­ple re­ceive your as­sets once you are gone.

“There are two dis­tinct meth­ods of re­duc­ing the im­pact on your es­tate. With the ‘eas­i­est’ method, you can look to ar­range your af­fairs to min­imise the im­pact of IHT; or al­ter­na­tively you can make ar­range­ments to fund for the IHT bill, en­sur­ing that it is paid and the re­main­ing es­tate is passed to your ben­e­fi­cia­ries. For many, a com­bi­na­tion of both can be a sen­si­ble so­lu­tion.

“Rather than mak­ing gifts out­right, the use of trusts can be very ben­e­fi­cial in en­sur­ing that your wishes are ad­hered to dur­ing your life­time and af­ter death. This can pro­vide peo­ple with the op­por­tu­nity to cre­ate a legacy for fu­ture gen­er­a­tions, cov­er­ing things such as school fees, univer­sity costs.

“There are also a num­ber of trust so­lu­tions that al­low peo­ple to set aside cap­i­tal for fu­ture ben­e­fi­cia­ries, whilst con­tin­u­ing to en­joy an in­come in their life­time, which can be im­por­tant for those who re­quire a level of in­come from their as­sets.

“Trusts of­ten sound com­pli­cated, but they are sim­ply a means of cre­at­ing a struc­ture which can con- tinue af­ter your demise. A good so­lic­i­tor can pro­vide be­spoke trusts, but for sim­ple re­quire­ments there are some very use­ful ‘off the shelf’ trusts that run along­side in­vest­ment so­lu­tions for clients.

“In an era of age­ing de­mo­graph­ics, it is also be­com­ing more com­mon for peo­ple to gift as­sets to grand­chil­dren and chil­dren dur­ing their life­time. There are a num­ber of an­nual ex­emp­tions and re­liefs and where th­ese are used it makes sense to doc­u­ment them.

“For many, a good level of IHT plan­ning can be achieved without hav­ing an im­pact on their in­come or need­ing to dras­ti­cally over­haul their fi­nances.”

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