Meet Ian and Jill. They are a retired couple aged 73 and 71 respectively. Until he retired Ian ran his own business and his wife Jill was a local GP. They have two children, Peter who is married to Claire and Susan who is divorced. Peter and Claire have two children and Susan has one child.
This family have had their ups and downs including illness within the family, worries about finances and marriages and the ongoing balance of living a life and doing all the things that everyone within the family wishes to do whilst ensuring that there are sufficient assets to look after the family’s ongoing and expected needs and well-being.
Ian has recently had a health scare and this has made him want to think a little more about planning for his family. He and Jill have already supported Peter through some financial difficulties caused by Peter’s failing business. They have also helped Susan through her divorce and her ongoing health issues.
Ian and Jill now need to sit down and look at their assets and consider how they can plan to minimise their liability to Inheritance Tax which inevitably will arise on their death given the value of their existing Estate. They need to look back and see when and how much they spent paying off Peter’s business debts and how much they spent on the provision of legal advice and private health care for their daughter Susan when she needed it most. Knowing when and how much and on what basis these payments were made is essential in working out their gifting options going forward from an Inheritance Tax perspective.
Ian and Jill are currently paying for the school fees for their grandchildren as Peter is unable to fund them at the moment and Susan has not yet returned to full time work. Ian and Jill do have excess income as they both have well performing investments and excellent pension provisions. They are thinking about how they can perhaps use some of this excess income in a structured way to make better provision for their children and their grandchildren.
Ian and Jill have heard and know something about the seven-year rule but they are unsure as to what the limits are for gifting in any one year before the seven-year rule is triggered. Jill has concerns that although she is content that Peter’s marriage is strong she has seen Susan’s marriage fail and she worries about the strain that is placed on Peter and his wife by their financial difficulties.
This is a common scenario and there are many threads within this family that cause anxiety as to the best way in which Ian and Jill can provide and plan for their family whilst ensuring that they have adequate provision for themselves. There are often many difficult issues to face but working with a solicitor who is a specialist in this area can ensure that clearer planning can be carried out in a structured manner that gives certainty and security to all.
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