Independent Financial Life Planners Bishop's Stortford: Giving to the Grandchildren?

Thursday, 12 December 2013

Giving to the Grandchildren?

Making sure the right trust structure is in place to pass assets down the generations is one of the tasks Enable of Bishop’s Stortfords IFAs can help you with , it can mean significant tax savings and mean that you are using your assets effectively.

For many grandparents, supporting their grandchildren financially not only provides great peace of mind but also provides excellent tax planning opportunities. However, they may very wisely be concerned about gifting funds absolutely as the recipients might waste the money before they realise what an asset they have.

A discretionary trust could be considered this will not only enable the trustees to issue ad hoc payments to beneficiaries but also allows them to make absolute appointments to a bare trust for beneficiaries who are under 18. This means that any taxable gain will be assessed against the minor beneficiary, using either their income tax personal allowance or capital gains tax exemption. This ensures the tax liability does not fall on the trustees. As minors are less likely to have exceeded their tax limits this could result in significant savings for the trustees.

When it comes to passing on money in order to cover a specific debt, there are two common financial challenges for the under 30’s. The first of these is the burden of student debt; the second is the requirement for a sizable deposit to enable independent living. Given the low impact student loan liabilities have on mortgage lending, having available funds to be used as a deposit for a first home may in many cases be a more worthwhile option for grandparents wishing to support their beneficiaries. Additionally this will ensure the asset remains within the family, rather than repaying a debt which has no chance of growth.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

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IFA Bishop's Stortford

At Enable Independent we know that our clients trust us and rely on our advice to help them to plan a better, more secure financial future. This is a responsibility that we take very seriously especially because we know that many clients have chosen us on the recommendation of friends and family. Each one of our advisers has deep expertise in their area of specialist knowledge and, as a team, we hold some of the highest qualifications available in the financial advice industry.

Our job satisfaction comes from using our skills to find workable, affordable and flexible solutions to meet our clients needs. Whether we are planning for known future funding requirements such as house purchase, school fees or income in retirement - or for the unforeseen such as job loss, long-term illness or early death, our independence from any product provider enables us to view the marketplace impartially. Our training permits us to look beyond a product's marketing hype and select on the basis of its fitness for purpose.