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- Independent Advice
- NHS & State Pensions
- Retirement Planning
- Estate & Tax
- Risk & Protection
If when you die you have not made specific provision for your children’s financial future, then the inheritance for any child under the age of 18 is held under a legal trust for their benefit.
However, this is a complex and expensive legal procedure, as it involves an application to the courts to allow for the trust to be established.
Once your child reaches 18, they can then spend (or squander) the sum inherited. Many people feel that this provision is not suitable, and in their professionally drafted Wills they therefore include a more flexible Child or Grandchild’s Trust. As a parent or grandparent, you can use this Trust to place an age restriction of your choice on any child’s or grandchild’s inheritance – at 21, or perhaps 25 years of age.
In addition, you can also nominate trustees. These are people in whom you have total confidence, who will manage the trust on behalf of the beneficiaries until they come of age.
This provision can thus eliminate a costly and complex court fee, and ensure your preferences are applied.
These Trusts are also exceptionally flexible. Should the trustees feel it is suitable, they can advance funds to the children prior to the age of inheritance. For example, should a child need medical care, or require funds for university.
If you have disabled or handicapped children, you can also make further long-term, secure financial provision for them. In these circumstances the Trust can receive special treatment for Tax. However, if there are also to be beneficiaries who aren’t vulnerable, the assets and income for the vulnerable beneficiary must be:
* identified and kept separate
* used only for that person
* Only that part of the trust gets special tax treatment.
INHERITANCE TAX PLANNING, WILL WRITING, TRUSTS AND TAXATION ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.