Thursday, 27 February 2014

Surplus income gifts and Inheritance Tax: are you fit for the fight?

UK Inheritance Tax (IHT) is essentially a tax on capital at death but allowing unused income to accumulate over the years, in effect turning itself into chargeable capital, can increase a person’s IHT liability.
It is a common misconception that one has to survive all gifts by seven years before the gift will be free of IHT.  Generally that tends to be true of capital gifts but not necessarily so for gifts of income.  If it is possible to show a regular pattern of gifts, made out of income that is not needed to maintain the giver’s standard of living, then the gifts may be exempt from IHT immediately. 

Thursday, 13 February 2014

Shall I compare thee to….a trust?

Novelty is usually a quality to be applauded but not necessarily in the law.  When drafting documents, the temptation is to follow the tried and tested route.  I was reminded of this recently when I was asked to clarify what type of trust had been created by a will containing the phrase ‘To my trustees on trust for my spouse absolutely’.  That magic word ‘trust’ had been used and there was reference to trustees.  Surely a trust had been created? 

Friday, 7 February 2014

The latest on pre-nups

Readers may be interested to read the following article from Teresa Cullen, our new matrimonial partner, about an important new development concerning pre-nuptial agreements.