The 6 Duke of Westminster died in August 2016. Leaving the bulk of his £9 Billion Estate to his eldest son Hugh, who at 25 year of age became the 7th Duke of Westminster.
Unlike the rest of us, if Gerald ( the deceased Duke) had left his estate in a Will. Giving everything to his eldest son Hugh. Hugh would have had to pay an Inheritance Tax Bill of somewhere in the region of £3.6 Billion.
This sum is not far off the total sum raised by Inheritance Tax per year. But do not worry, gentle reader, as the Westminster’s had access to the finest Lawyers in the land and accountants and financial advisers and the rest, and the whole of the Duke’s Estate was left in Trust.
So lucky young Hugh ( 25) got the Estate and didn’t have to pay any tax. Trebles all round. Well done old chap.
Well they hadn’t done anything wrong. But my mother was absolutely livid about it. “I’ve paid tax on mine and your father’s money” She said “I’m not going to pay it twice” “You’ll never pay the children’s University Fees” Well she’s right. But we aren’t talking about an estate of £9 Billion, even if Dot and Al were careful savers.
What Hugh’s Dad had done was put all his estate in to a Trust. Think of it like a box, stuffed full of 9 Billion pound coins or £100,000,0000.00 tenner’s (used of course) if that’s easier.
You choose who the Beneficiaries are ( the survivors of your death, oldest child etc) Appoint Trustees to manage the Trust. Pay the 10 yearly Inheritance Tax Periodic Charge ( currently at 6%) and watch the money cascade from generation to generation. Bingo.
It gets better; Because Gerald and his Dad’s before him were all landowners, there are really generous Agricultural and Business Property reliefs available, to further mitigate tax. Brilliant. And we live in a Democracy.
Now, having cheekily smirked whilst we tug our forelocks. There is nothing to stop you, Yes You. From creating a Trust for your own children.
Get money out of your estate and into Trust.
So you can get assets and property out of your estate and into Trust, so when you die, they don’t belong to you, or form part of your estate. Therefore, not counted for Inheritance Tax purposes. (40% saved Jonny.)
However, remember, all the Cash, stocks shares, property and precious items, belong to the Trust. Not in someone’s estate where they can be taxed.
Using a trust also means you can say what happens to the assets, who the money goes to, at what age, so you can protect young and vulnerable beneficiaries, or spend thrift children.
Don’t give them anything till they are 30 for example.
You can give your new wife boyfriend girlfriend lover the right to live in a house or the penthouse for life and still retain the right to pass it onto the children when they die. It’s only fair.
The options are limitless. We are being frivolous about what is a very serious business and when we at Paul Darnborough Solicitors come to prepare your Trust, please be assured we will give you the most serious, accurate, considered and thoughtful advice. We will also run the draft Trust passed our Expert Barrister. You only need to do it once. So let’s do it properly.
You will need to appoint Trustees, who have a legal duty to manage the trust assets and look after the trust.
There are many types of Trust for example
- A Bare Trust. This is formed in writing a Will where you leave something to a Beneficiary in a Will.
- Interest In Possession Trust. This allows the beneficiary of the trust to get income from the Trust, or live in Trust owned property. It does not allow the beneficiary to have ownership of the cash property or other assets that are in the trust, So they can’t sell your house, or reduce the estate. The Beneficiary could be your partner and the trust used to pass on your investments and other assets to your surviving children. Use this if you have remarried and want to protect your children from your first marriage.
- Discretionary Trusts. Here you give the trustees absolute power to determine how to manage the trust. Including making investment decisions.
- A Mixed Trust, Trust for a Vulnerable Person, Non Resident Trust. The list is endless depending on the purpose and what you want to achieve.
Have a look at our Website and it’s advice and guide to Trusts at Paul Darnborough Solicitors.
The options are dizzying and the process can be a bit intimidating. We are here to take all that stress away.
This is what we do, as your trusted advisers and Lawyers.
You don’t have to be as rich as the Duke but we all lead busy complex lives that need managing and putting in order. Let us take the strain out of that.
Come in for a confidential chat with Paul Darnborough Solicitors. Your personal legal service. For you and only you.