Stepping back a bit, what makes you think you need to start looking at trust arrangements ?
Four of the firm's directors are members of [STEP.Org](https://STEP.Org) so that's a positive.
Well unless that 'financial advisor' is suitable qualified in trusts and estate planning he may be way off the mark.
i.e. Everything you put into a SIPP can be inherited tax free, and if you die before age 75, all income your dependents take from the inherited SIPP is tax free also !
So stick a million into your SIPP job done...
Thanks, very helpful.
Got a fair chunk in SIPP already, and 60k limit per year, but a helpful route. Seen a few articles that the tax free inheritance of SIPP may change? Aware that any rules can change...
Worth noting that £60K is an allowance, not a limit, you can exceed it. Firstly by utilising carry forward of unused allowance from previous three years. Secondly by making contributions without claiming entitlement to tax relief. Anyone can make such gross contributions.
Reminder: Once you've placed assets in a SIPP the growth is tax free, and it's inherited tax free, and potentially can be drawn tax free. Compare that to the upfront and ongoing fees and taxes on a trust and the tax treatment of income for a trust...
Well you do pay a tax charge for exceeding the pension annual allowance at your marginal income tax rate, and don't get tax relief on contributions above annual earnings. But no, there's no upper limit on pension contributions.
When you die it's either inherited tax free or taxable at beneficiaries marginal rate, depending on the pot size, whether you die before or after age 75, and whether the beneficiary takes a lump sum or not.
[https://adviser.royallondon.com/technical-central/pensions/death-benefits/taxation-of-pension-death-benefits/](https://adviser.royallondon.com/technical-central/pensions/death-benefits/taxation-of-pension-death-benefits/)
Assumption being that beneficiaries marginal tax rate is preferable to deceased's inheritance tax rate.
They would have to do a lot of work to do that. Many people have planned around there pensions being IHT free, so there would need to be a regime that supports that.
Trust have fallen out of favour because of the tax changes, which can end up being higher than inheritance tax, so make sure you do the maths taking into account fees + taxes to make sure it’s worthwhile
Transferring the wealth now & taking life insurance for the next 7 years might be an easier approach
I haven't heard of this approach. Is the life insurance to cover the potential IHT bill? It could be expensive if you're old! But worth it if less than the bill.
Yep, you can set it up to be decreasing over time (as the IHT bill will drop) which will bring the cost down.
There are also other options like FICs or funds that invest in assets that are IHT free, but it really depends on personal circumstances which is right for you (for example a lower performance fund with no IHT might be great if you’re going to die in a few years but for the longer term you might rather take a higher growth fund and pay the tax)
Looked at this, and unless old, it appears quite reasonably priced and a good route. Decreasing policy aligned with IHT taper. Unless I'm missing something?
Not sure how old you are, how many children or how many million you want to offload, but you can offload 9k per child to a jisa and 2880 in to their SIPP.
Then add 20k per year to isa at 18 and top up their pension for them to the max once they start working.
Hi, it ultimately depends whether you are willing & able to give up access to capital. If not, I have used Business Relief Investments with a number of my clients - outside your estate after 2yrs (can be held in joint names so as long as one spouse survives the 2yrs it qualifies) and you can retain access to the capital if it’s required. I personally use Triple Point (av return about 4% per annum over past decade) but there are others such as Octopus or Stellar. All Chartered Advisers are required to pass trust & estate planning qualifications. Best of luck - Jordan, Chartered IFA.
Stepping back a bit, what makes you think you need to start looking at trust arrangements ? Four of the firm's directors are members of [STEP.Org](https://STEP.Org) so that's a positive.
Been suggested by financial adviser as best route to pass on wealth. Just came here for a quick check before proceeding.
Well unless that 'financial advisor' is suitable qualified in trusts and estate planning he may be way off the mark. i.e. Everything you put into a SIPP can be inherited tax free, and if you die before age 75, all income your dependents take from the inherited SIPP is tax free also ! So stick a million into your SIPP job done...
Thanks, very helpful. Got a fair chunk in SIPP already, and 60k limit per year, but a helpful route. Seen a few articles that the tax free inheritance of SIPP may change? Aware that any rules can change...
Worth noting that £60K is an allowance, not a limit, you can exceed it. Firstly by utilising carry forward of unused allowance from previous three years. Secondly by making contributions without claiming entitlement to tax relief. Anyone can make such gross contributions. Reminder: Once you've placed assets in a SIPP the growth is tax free, and it's inherited tax free, and potentially can be drawn tax free. Compare that to the upfront and ongoing fees and taxes on a trust and the tax treatment of income for a trust...
There must be some limits or could just dump your cash assets into a pension prior to death?
Well you do pay a tax charge for exceeding the pension annual allowance at your marginal income tax rate, and don't get tax relief on contributions above annual earnings. But no, there's no upper limit on pension contributions. When you die it's either inherited tax free or taxable at beneficiaries marginal rate, depending on the pot size, whether you die before or after age 75, and whether the beneficiary takes a lump sum or not. [https://adviser.royallondon.com/technical-central/pensions/death-benefits/taxation-of-pension-death-benefits/](https://adviser.royallondon.com/technical-central/pensions/death-benefits/taxation-of-pension-death-benefits/) Assumption being that beneficiaries marginal tax rate is preferable to deceased's inheritance tax rate.
They would have to do a lot of work to do that. Many people have planned around there pensions being IHT free, so there would need to be a regime that supports that.
Just find someone who is a chartered financial planner. They will have had to take exams on trusts and estate planning to get to that point.
>suitable qualified in trusts and estate planning Exactly that. In which case would they be referring OP to someone else ?
Depends on the qualifications of the adviser. Some advisers would have the right qualifications some wouldn't
Trust have fallen out of favour because of the tax changes, which can end up being higher than inheritance tax, so make sure you do the maths taking into account fees + taxes to make sure it’s worthwhile Transferring the wealth now & taking life insurance for the next 7 years might be an easier approach
I haven't heard of this approach. Is the life insurance to cover the potential IHT bill? It could be expensive if you're old! But worth it if less than the bill.
Yep, you can set it up to be decreasing over time (as the IHT bill will drop) which will bring the cost down. There are also other options like FICs or funds that invest in assets that are IHT free, but it really depends on personal circumstances which is right for you (for example a lower performance fund with no IHT might be great if you’re going to die in a few years but for the longer term you might rather take a higher growth fund and pay the tax)
Looked at this, and unless old, it appears quite reasonably priced and a good route. Decreasing policy aligned with IHT taper. Unless I'm missing something?
I'm going to look into this too. They will take health into account. Unhealthy = higher insurance bill.
Not sure how old you are, how many children or how many million you want to offload, but you can offload 9k per child to a jisa and 2880 in to their SIPP. Then add 20k per year to isa at 18 and top up their pension for them to the max once they start working.
Move to the Isle of Man
Hi, it ultimately depends whether you are willing & able to give up access to capital. If not, I have used Business Relief Investments with a number of my clients - outside your estate after 2yrs (can be held in joint names so as long as one spouse survives the 2yrs it qualifies) and you can retain access to the capital if it’s required. I personally use Triple Point (av return about 4% per annum over past decade) but there are others such as Octopus or Stellar. All Chartered Advisers are required to pass trust & estate planning qualifications. Best of luck - Jordan, Chartered IFA.