Thursday, 28 August 2014

Fed up with trusts? Try a FIC!

If you want to give something away but retain some control over it, chances are that an English lawyer will tell you to use a trust. 

I am a great fan of trusts but, let’s be honest, they have some potential drawbacks.  For example, if an individual puts more than £325,000 into trust, a 20% Inheritance Tax (IHT) entry charge could be payable.  Most trustees currently pay Income Tax at between 37.5% and 45% and Capital Gains Tax (CGT) at 28%, which leaves less after tax to reinvest.  It is also very difficult to prevent beneficiaries interfering in the trust administration completely – the whole premise of a trust is that the trustees have to be accountable to the beneficiaries.  Laudable but not always wanted.

In many cases, with proper tax planning and a carefully crafted trust deed, most of these potential drawbacks can be managed.  But, let’s be radical and think the unthinkable, are there any alternatives to trusts out there?  Cue the FIC (Family Investment Company).

Thursday, 14 August 2014

Lucian Freud’s ‘secret will’

A court case over the £42 million residuary estate of the painter Lucian Freud has resulted in its true recipients remaining a closely guarded secret, despite the fact that his will was made public when it was proved at the Probate Registry.

So how was this feat achieved and, for anyone not wanting the world to know to whom they leave their wealth after death, is this a trick worth imitating?

Thursday, 31 July 2014

Carry On Giving: how to manage the CGT bill on gifts

With asset values on the rise, many of my clients’ thoughts are turning to Inheritance Tax (IHT) planning.  That can sometimes lead to thoughts about giving away assets to children in lifetime in the hope of surviving seven years.  However, it seems even the best laid IHT mitigation plans can come unstuck when Capital Gains Tax (CGT) is factored in. 

Unfortunately, gifts still count as disposals at market value for CGT purposes so, unless a relief (such as private residence relief) applies, gifts can trigger CGT and the giver may need to find extra, liquid funds, above and beyond the gift itself, to pay the resulting CGT bill. 

Thursday, 17 July 2014

‘One man, two guvnors’: appointing deputies in the Court of Protection

Since February, when the President of the Family Division and the Court of Protection issued practice guidance on the publication of Court of Protection decisions, there have been many more Court of Protection cases reported in the mainstream press. 

If publication of cases raises awareness among the general public of the benefit of planning for incapacity, that alone will make it worthwhile.  Many people are still unaware of what could happen to their assets if they become incapable of managing them or what the options are in this respect.

Thursday, 3 July 2014

Dying without a will – the hard facts

‘I really must get around to writing a will!’  I have heard that refrain from several wealthy individuals recently and it’s often easy to assume that everyone who should have a will knows that and has one.  But such assumptions are dangerous.

I am constantly surprised by who doesn’t have a will.  However, the surprise works both ways because those who haven’t made a will are usually amazed to learn from me how the intestacy rules will operate on their death if they don’t make one.

Thursday, 19 June 2014

‘Reports of my death have been greatly exaggerated’: Trusts, IHT and the Government’s proposals


In its latest consultation document of 6 June 2014, the Government proposed some radical amendments to the Inheritance Tax (IHT) system, which will affect anyone planning to set up new trusts or add to existing ones after 6 June 2014.

Thursday, 5 June 2014

Best will for……..Part 2: Married entrepreneurs

I am lucky enough to meet inspiring entrepreneurs on a regular basis in the course of my work.  Although they are busy building up successful business empires in very different sectors, they all tend to have one thing in common, though.  Their Inheritance Tax (IHT) planning is non-existent!  Yet if they knew what was at stake, their priorities might be rather different.