Preservation of Assets
The family property
When incorporating Trusts in Wills and particularly for Discretionary Trusts. We often use the value of the family property to fund the Trust. The reason for this is most Estates are asset rich but cash poor. On the death of the first spouse that person’s interest in the house will be put into Trust.
To be effective as a Trust, only the deceased’s interest in the house can be put into the Trust. The surviving spouse must also have his/her own share in the property. To ensure that the Trust is set up correctly and the surviving spouse protected the house must be held as Tenants in Common.
Are you a Joint Tenant or Tenant in Common?
Often times when couples have bought a property many years ago they purchased as Joint Tenants. When owning as Joint Tenants, all owners have the property between them. On the death of an owner the property goes automatically to the surviving owner/s.
When holding as Tenants in Common owners have separate legal interests in property. This means that an interest in property can be used to fund Trusts, or gifts can be made to family members.
We are more than happy to assist in converting Joint Tenancies to Tenancies in Common. Please contact us about our Severance service.
The key to properly planning your Will provision, is to ensure that major assets are held correctly. When your assets are organised we can achieve tax mitigation, and preserve assets for your family.
Please note we often work with independent financial advisers and accountants. If we feel you need such advice we will inform you.
Lifetime Gifts & Tax
Do you sometimes wish that your family could benefit now rather than later?
Gifts can be made during your life, not just on your death. Whilst many know that giving too much away seven years before death will have Inheritance Tax consequences, such a gift could have other tax implications.
If a gift is substantial there may be a charge to Capital Gains Tax, such tax is often referred to as gift tax. If you still retain a benefit from a gifted property this can mean the gift is ineffective (IHT), or that there will be a charge to Income Tax!
Before deciding to make any gifts please ask us first for advice.
If you have spare income and want to make a gift, there may be way to benefit your family now. As we know the rules about making gifts out of income, we may be able to assist you in giving thousands away during your life tax free!
If you would like further advice about your particular set of circumstances and tax please contact us.