Thursday, 18 December 2014

Pilot trusts post the Finance Bill 2015


One of the bigger surprises in this year’s Autumn Statement was the news that the much consulted upon new ‘Settlement Nil Rate Band’ has been dropped. 

One of the reasons for proposing a Settlement Nil Rate Band was to make the use of multiple trusts less attractive for Inheritance Tax (IHT) mitigation purposes.  Each trust would no longer have its own IHT nil rate band to set off against the periodic charges to IHT, such as the ten year anniversary charge and any exit charges, that it may face during its existence.

Now, with the publication of draft clauses for the Finance Bill 2015 last week, we learn that, in certain situations, there remains a future for planning involving multiple trusts after all.

Thursday, 4 December 2014

CGT Principal Residence Relief update


My 24 April 2014 blog reported that buried within the Government’s March 2014 consultation on extending Capital Gains Tax (CGT) to non UK residents was a change to CGT Principal Residence Relief (PRR) affecting UK residents. 

Last week, the Government published its response to the consultation and confirmed that PRR is set to change.  The changes are not as envisaged in the consultation document though. 

Thursday, 20 November 2014

Can trusts be trusted in the event of divorce?


Preserving family wealth is uppermost in many families’ minds.  Therefore, knowing how structures created to hold family wealth will perform in the event of a family member divorcing is crucial.

Unfortunately, the treatment of trusts on a beneficiary divorcing is to some extent uncertain.  The legislation is clear enough: anyone with an irrevocable, fixed interest in a trust (e.g. life tenant/capital remainderman) can have their interest transferred to their spouse or child in the event of a divorce or separation.  The terms of ‘nuptial settlements’, be they discretionary or fixed interest, can also be varied to permit a spouse and/or children to benefit.  Therefore, trusts that want to remain outside the divorce courts will take care not to be regarded as nuptial settlements. 

Thursday, 6 November 2014

Asset protection: careful what you promise...


Threats to wealth come in many guises.   Mr Southwell was described by the judge in Southwell v Blackburn at the Court of Appeal as ‘shrewd, cautious and guarded’.  He knew that if he married Ms Blackburn, who had two children from a previous marriage, she would have a financial claim against his assets in the event of divorce.  He also knew that, when he bought a property for her and her teenager children to live in with him, putting her on the title with him would be risky too, so he made sure that didn’t happen either.  He bought the property with the help of a repayment mortgage and he made all the repayments.  Exemplary thus far. 

Thursday, 23 October 2014

Come to our seminar on protecting family wealth: 13 November 2014, London

We’re often asked about the current state of play with UK pre-nups and, as a wealth lawyer, I’m always interested to know how bullet-proof trusts are, should a beneficiary divorce, and whether there are any alternatives to trusts that might offer better protection. 


So I've teamed up with my colleague Teresa Cullen, our family partner, and we'll be exploring exactly these issues in our seminar here at Fladgate, 16 Great Queen Street, London WC2B, on 13 November 2014. 


Further details below.  If you'd like to join us, please RSVP to register your interest. 

Bare Trusts: are they the ‘next big thing’?


The third consultation on Inheritance Tax (IHT) charges for trusts assumes that every individual will have only one settlement nil rate band (SNRB) to put against the periodic charges to IHT of all trusts created in lifetime, or on death, by that individual.  (For more on the new SNRB, see my blog post of 19 June 2014.)

As the SNRB does not renew itself every seven years, the well advised will soon begin to realise that the SNRB is a precious commodity that needs to be preserved and carefully allocated.

The SNRB only needs to be allocated among ‘settlements’ though.  As it seems that Bare Trusts are not settlements for IHT purposes, if the SNRB does come into effect, there will be no need to allocate any SNRB to Bare Trusts.  So, are Bare Trusts about to become all the rage, if you have young children or grandchildren to plan for?  You can save your SNRB to allocate against your other trusts/will trusts instead! 

Now is the time, then, to reacquaint ourselves with what Bare Trusts have to offer. 

Thursday, 9 October 2014

Best will for… Part 3: most married couples


I like the simple things in life. When it comes to wills, most of my married couple (and civil partnership) clients want to keep things simple too. ‘Everything to my spouse and then to my children equally, please’ is a common refrain. There is nothing wrong with that.

The only problem with keeping things that simple, though, is that you can be wrong-footed if your family’s circumstances have changed by the time you die, or afterwards. The child’s marriage doesn’t work out. The child’s ex-partner wants a stake in your child’s home. Your spouse loses capacity to manage finances after your death. Lawyers have a tendency to look on the black side and chances are none of these things will happen. However, the fact is that a simple will, leaving everything to heirs outright, gives no protection against any of these things, so you are taking a risk.