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).

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?