We advise our clients on the management of their private wealth, preserving it for future generations and ensuring that on their death it will pass in accordance with their wishes in an effective and tax efficient way.

Tax advice is an essential part of succession arrangements, as effective planning can produce significant tax savings.

We guide clients through their options which may include making lifetime gifts, the use of tax-efficient wills and the placing of assets in structures such as trusts and companies.

Our aim is to enable our clients to control, with a degree of flexibility, their assets during their lifetime and after their death and to maximise any tax savings.

We seek to build enduring relationships with our clients, and always work to obtain and develop a thorough understanding of individuals, their families and their assets. As a result we provide tailored planning advice which is appropriate to the particular needs of each client.

If you need solicitors for estate planning please do call or email – we have a highly experienced team who find the best solutions for each client.

We advise individuals and businesses on all aspects of corporate and personal tax. Our expertise includes inheritance tax and succession planning, institutional investment, corporation tax, income tax, capital gains tax, stamp duty land tax and value added tax.

We provide practical advice to clients based in the UK and abroad, helping them to structure and manage their business and personal affairs in a tax efficient manner wherever in the world their assets and interests are located.

This includes advising clients on the tax aspects of:

• Investing in a business
• Taking up residence in the UK, leaving the UK or returning
• Setting up and administering UK trusts
• Succession planning and drafting wills
• Buying a property
• Taking up or leaving employment

A will guides those who are left behind and can save worry and heartache at a time of great emotional stress. Making a will is also usually the first step to take in structuring your affairs in order to minimise your liability for inheritance tax.

Individuals subject to UK inheritance tax (IHT) currently have a tax-free allowance of £325,000. This ‘nil-rate band’ (NRB) can be transferred between spouses on death resulting in a potential tax free-allowance of up to £650,000 for surviving spouses.

From 6 April 2017, an additional tax free allowance (known as the ‘residence nil rate band’ (RNRB)) applies so that less IHT may be paid when the family home is left to descendents. Claiming the RNRB could enable an additional £100,000 to £350,000-worth of assets to pass to the next generation without a charge to IHT with potential tax free allowances for a surviving spouse reaching £1,000,000.

The terms of your Will can affect your ability to claim the RNRB. Therefore it is important to review your Will now (or make one if you have not already done so) to make sure that your family can benefit from the maximum available tax free allowance when you or your spouse or civil partner die.

Key Points

• To benefit from the RNRB, your estate must:

• comprise a qualifying residential interest (i.e. your home) at the date of your death; and
• that residential interest must be ‘closely inherited’.

‘Closely inherited’ means that the house is inherited by your lineal descendants (children/grandchildren) and includes step and adopted children.

• If a couple own more than one property at their death then their executors can nominate which property will benefit from the relief and the RNRB is still available where an individual ceases to own a home (for example they sell their home to move into a residential care home) or downsizes to a smaller property.

• If a deceased person’s estate is valued at over £2,000,000 at the time of their death then there will be a tapered withdrawal of the RNRB at a rate of £1 for every £2 above the £2,000,000 threshold.

Example

A husband dies in June 2017 leaving his entire estate worth £1.8 million to his wife. There is no inheritance tax liability and the husband’s full RNRB and his NRB is transferred to his wife. The wife then dies in June 2020 leaving her estate worth £2 million (which includes her primary residence) to be divided equally between her two children. Her estate will benefit from a NRB of £650,000 and a RNRB of £350,000, so a total relief from inheritance tax of £1,000,000.

Things to consider

• If you think that your estate will be worth over £2,000,000 at your death you may wish to consider how the value can be reduced below this level by effective succession planning.
• Who are you leaving your residence to in your will? Will you benefit from the RNRB?
• Keep records if you are selling your residence and are buying somewhere cheaper, or not buying anywhere else. We recommend keeping a copy of the sale contract with your Will.

Who will not benefit?

• Individuals who rent a property and invest all their capital, e.g. in shares / rental properties
• Individuals who do not have any children
• Partners who are not married or in a civil partnership will not be able to transfer any unused part of the RNRB (or their NRB) although they will still benefit from their own RNRB.

Setting up a family trust

There is considerable flexibility in the way in which a trust can operate.

In terms of setting up a trust, the formalities involve creating a trust deed. This is the last stage in the process. If you are considering setting up a trust it’s essential to fully understand the implications of doing so.

Types of trusts typically include :-

Discretionary Trust – these types of trust can vary considerably, with trustees potentially given very wide discretion as to what to do with assets, such as selling or retaining existing assets, buying assets and potentially also discretion over which of the beneficiaries should gain more from the assets than others. Discretion can be limited in certain ways, and in this type of trust the beneficiaries are named, but the trustees are given the power to decide how to distribute the assets between them.

Interest in Possession Trust – this type of trust there is a short term beneficiary who benefits during his or her lifetime, but upon that person’s death the asset or assets are then utilised by or transferred to another beneficiary.

With this type of arrangement, it is important to ensure that the asset or assets are preserved, so it may be that the beneficiary with the initial interest only receives income and the trustees are expressly instructed to preserve the assets or adopt a conservative approach towards dissipation of the asset.

Fixed Trust – this type of trust is often utilised where the intention is to benefit certain named beneficiaries and where the settlor intends to be clear and certain about the respective entitlements of the beneficiaries, perhaps by reference to percentages.

There are potential tax implications which should also be considered carefully when deciding whether or not to set up a trust, as well as considering the possible advantages and disadvantages of doing so.

If you need a solicitor for setting up a family trust, drafting a trust deed, issues on administering a trust or legal issues or problems with trustees, or in relation to the related taxation issues, please do get in contact with us.

What are the advantages of a discretionary trust?

There are a number of possible advantages of setting up a discretionary trust, which include:

• Protecting beneficiaries from creditor claims:if no individual beneficiary has a legal entitlement to the trust assets, those assets will be protected from the beneficiaries’ creditors;
• Planning for the future: whilst the trust may be discretionary, certain instructions may be incorporated, for example a provision which states that certain beneficiaries will not become entitled to benefit until they reach a certain age or until specified events happen, or that they should lose entitlement on the occurrence of certain events;
• Potentially, the reduction of inheritance tax liability;
• Provision for disabled or vulnerable relatives or children from previous relationships;
• Providing a means of protecting assets from divorce;
• Protecting your wealth, especially if you have trustees you are very confident you can rely on.

If you need a solicitor for setting up a family trust, drafting a trust deed, issues on administering a trust or legal issues or problems with trustees, please do get in contact with us.