Being too cautious about helping your children during your lifetime could cost you more in Inheritance Tax
Many believe that the coronavirus lockdowns will result in arise in the divorce rates but holding on to your money could increase your inheritance tax bill.
Just over 25% of parents have little or no confidence in their children’s marriages lasting with a similar number saying their children are already separated or divorced.
It’s not unusual for parents to disapprove of their children’s choice of partner, but they can be equally reluctant to interfere in case they cause a family fallout.
So what can parents do to prevent their wealth falling into the hands of their children’s partners?
Mitigation by setting up a family trust allows wealth to be passed out of the parent’s estate for inheritance tax purposes but still gives them control as trustees.
The trust can buy property, pay income from investments or even make loans to the beneficiaries which usually includes the children & unborn grandchildren.
Trusts allow a trustee to decide when is best for a child to inherit capital and income. This means that the children benefit and not their creditors.
Are you worried about seeing your wealth go to the wrong person?