Trusts are used as a means to transfer wealth down the generations but in a way which controls how and when the intended beneficiaries receive income and capital. By making a gift to a trust rather than outright to an individual, you can still manage and control the assets as trustees and the trust assets are protected from creditor's claims, from the beneficiaries themselves and also potientially from claims on divorce.
The changes introduced to the inheritance tax legislation in the 2006 Finance Act make it extremely difficult to transfer assets worth more than the prevailing nil-rate allowance into a trust, unless such assets qualify for either business property relief or agricultural property relief at 100%.
Choosing a Family Partnership or a Family Investment Company could eliminate some of the tax-related charges.
Would a Family Partnership or a Family Investment Company work for you?
Family Partnerships and Family Investment Companies can be structured in such a way as to secure controls - similar to those achieved by a trust - over what a partner or shareholder (the beneficiary) receives by way of income and capital, but also as a measure of protection for the Partnership/Company assets.
A benefit of a Family Partnership or Family Investment Company structure is that assets can be transferred to the intended beneficiary as a potentially exempt transfer, so no inheritance tax is payable, regardless of the amount involved, so long as the transferor survives the transfer by seven years. The gifted asset is also not owned outright by the recipient.
We can provide detailed advice on which structure would be most appropriate for your and your family's needs.