The modern private wealth manager needs to have a broad understanding across the disciplines of law, tax and investment. Nowhere is this range of expertise more required than in the field of estate planning.
For most people estate planning means protecting their family and devolving their wealth in accordance with their wishes. Inheritance tax mitigation is also an important objective for many clients.
Estate and inheritance tax planning does not need to involve complex structures. Much can be achieved with simple planning if considered at any early enough stage. The ability to make unlimited gifts that escape the inheritance tax net after seven years is a very valuable concession.
Gifts into trusts, although effectively limited to the nil rate band (£325,000 for 2014/15) since 2006, remain an effective strategy for clients who wish to receive the inheritance tax savings of a gift but do not wish to provide their beneficiaries unconditional access to the gifted assets or monies. It is also possible to make use of trust structures that provide some form of ongoing access to capital or an income for the donor. These ‘retained interest’ structures such as flexible reversionary trusts, discounted gift trusts and loan trusts provide the ideal solution for those clients who wish to save inheritance tax yet are also wary of losing access to all their capital.
It is imperative that specialist advice is sought to ensure that any planning does not infringe the gift with reservation of benefit (GROB) or pre-owned assets (POAT) rules. These rules have been enacted to prevent people giving away their assets whilst retaining some form of ongoing access to the assets. Specialist trusts such as flexible reversionary trusts, discounted gift trusts and loan trusts almost invariably involve an integral element of Financial Conduct Authority (FCA) regulated advice, and therefore few tax or legal professionals are in a position to advise on these structures.
Christian Ward is an expert on retained interest trusts such as flexible reversionary trusts, discounted gift trusts and loan trusts and is happy to work with your existing legal and tax advisers to create a coherent estate plan that can adapt to your family’s changing circumstances.