If your assets exceed the Inheritance Tax threshold (£325,000 per person) the tax man will want to take a bite. If that same money passes down a generation and your beneficiaries are likely to be above the Inheritance Tax Threshold, the taxman will be back for a second bite.
Doesn’t sound very fair, does it? That’s where Trust Funds can help.
Placing money in a Trust Fund gives your money a raft of legal protections. Trust funds don’t pass through Probate, for example, avoiding expensive legal fees and lengthy delays. This means that the money is immediately available to pay funeral expenses.
Trust Funds are also free of Inheritance Tax if the amount is below the Inheritance Tax threshold and can be free of Income Tax and Capital Gains Tax if structured properly.
It’s important to realise, however, that money placed into a Trust does not means that you no longer have access to the money. The biggest advantage here is that, depending on the type of Trust you set up, it may no longer counts toward your children’s Inheritance Tax bill.
The tricky bit is deciding on the right kind of Trust and working through the legalities of setting one up. If you’d like to talk this through, drop us a line on …. – we’re always happy to help.