In a wide and varied practice, I repeatedly see a common theme and that is parents and grandparents who have accumulated wealth for a variety of reasons wishing to help the next generations on their way in life not only by making provision for them in their Wills but also through lifetime gifting.
We are all familiar with the concept of the bank of Mum and Dad and for many people, this is a very real scenario. It is not beyond the realms of possibility to think that the bank of Mum and Dad will become even more important following the COVID-19 pandemic as many more people face long term economic challenges caused by uncertainties in their employment, the need to remain at home for the schooling of children and the recession that we will inevitably face following the pandemic.
Parents and grandparents have long assisted the next generation in helping them with deposits to get on the property ladder however more and more we are seeing this generation stepping in to settle debts, give a financial helping hand in setting up a business or paying off a mortgage or commonly grandparents paying grandchildren’s school or university fees. Depending on the circumstances it may be appropriate to consider securing or protecting the value of that gift. By making an outright gift, you relinquish all control of it and if this causes any feelings of discomfort for the person making the gift then they may wish to consider the use of a Trust to protect not only the value of the gift but also the recipient.
We have commonly seen a wide use of Trusts for grandchildren where grandparents have excess income which they can effectively pass into a Trust for their grandchildren without triggering the seven-year rule. Trusts are also very effective vehicles for making provision for vulnerable or disabled beneficiaries in a tax efficient way.
We have also seen a rise in enquiries relating to Charitable Trusts as there is an increasing section of society who wish to leave a proportion of their Estate to Charity upon their death whilst realising that charitable gifts during lifetime can also play their part in a wider Inheritance Tax planning strategy.
The rules regulating the use of Trusts are complex as are the rules relating to Inheritance Tax planning and if you wish to explore these further you should always speak to a solicitor who has specialist knowledge in this area.
Whatever your needs or circumstances, we are sure we can help you so please do not hesitate to get in touch.
Sarah Murphy
