Trusts and Inheritance Tax planning solicitors

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Trusts and Inheritance Tax planning specialists

A trust is a legal arrangement where somebody is holding some property or assets on behalf of somebody else. There are many different types of trust and people create them for a variety of reasons.

At Levi Solicitors, our team of trusts and Inheritance Tax planning solicitors can provide you with specialist advice tailored to your needs.

Book an appointment below, or call us on 0800 988 7756 for an initial discussion.

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How can our trusts solicitors help you?

Trusts are either created during somebody’s lifetime or in their will. Some of the reasons people create a trust include:

  • To protect assets for beneficiaries who are unable to manage their own money due to their age, mental capacity, or certain vulnerabilities such as addictions
  • Protect your assets from future nursing home fees
  • Reduce Inheritance Tax
  • To manage personal injury compensation
  • Prevent assets from effecting somebody’s entitlement to means tested benefits.
  • To benefit charitable causes.

We understand that everyone’s situation is different. Our trusts and Inheritance Tax planning solicitors will work with you to put together a plan especially for your specific needs.

How can our solicitors help you with Inheritance Tax planning? 

When planning for the future, it is important to consider the impact that Inheritance Tax may have on your estate. Our trust planning solicitors can advise on the best ways to ensure that your loved ones benefit from your estate, avoiding Inheritance Tax where possible. There is a range of options available, including charitable giving, which can reduce the rate of Inheritance Tax payable, setting up trusts and making lifetime gifts.

We work with financial advisers and accountants and will use our knowledge and experience to provide you with individual, bespoke advice.

Why choose our trusts and Inheritance Tax planning solicitors?

Specialists Wills and Probate SolicitorsSpecialists

We have been providing Inheritance Tax advice and advising clients on protecting their future for many years. We will use our wealth of knowledge to give you advice tailored to you.

Our team is made up of specialist wills solicitors with many years of experience. Andrew Milburn is a member of STEP (the Society of Trust and Estate Practitioners) and is an accredited member of The Association of Lifetime Lawyers. All of our solicitors are Dementia Friends.

Our team have been nationally recognised as experts in their field. We were awarded Highly Commended in the Private Client Team of the Year – Wills and Probate in the Modern Law Private Client Awards 2023. Later the same year we were proud to win the prestigious Private Client Team of the Year – Boutique at the British Wills and Probate Awards 2023.

Wills and Probate Services Service

Our trusts and Inheritance Tax planning solicitors are knowledgeable and experienced. We will listen to your situation and give you straightforward, practical advice with no legal jargon.

Here for you, wherever you are icon Here for you, wherever you are

We have offices in LeedsLeeds North (Moortown) and London.  However, we can assist you with your trusts and Inheritance Tax issues wherever you are. We can have meetings with you by telephone or video call.

Transparent Fees Transparent pricing

We understand that you will want to know how much everything will cost. We will always give you a realistic cost estimate at the outset and keep you updated throughout.

Book weekend and evening appointmentsWeekend and evening appointments

Life can be busy. So, to make life easier, we offer out of hours appointments to our Trusts and Inheritance Tax planning clients. You can meet with us until 8pm on a Wednesday or on a Saturday morning.

Book an appointment online or call us today on 0800 988 7756 for an initial consultation. Our telephone lines are open 8.30am – 9pm, seven days a week.

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Trusts and Inheritance Tax planning FAQs

Trusts can be complex. So, we have answered some Frequently Asked Questions as a starting point.

What is Inheritance Tax planning?

After someone dies, Inheritance Tax may be payable depending on the net value of the estate, who is inheriting the estate and whether there are any available allowances that can be used from the estate of a spouse or civil partner who died previously. It is calculated at a rate of 40%. Without planning, Inheritance Tax can take a sizeable chunk out of an estate.

UK Inheritance Tax planning involves structuring an estate and taking certain actions during someone’s lifetime to legitimately reduce the amount of tax that will be payable by the estate in the future.

There are several ways of doing this and you are strongly advised to seek expert advice to ensure that you choose the right option for your situation and your loved ones. Inheritance Tax planning is a complex area of law and mistakes can be exceptionally costly.

What’s the best way to reduce Inheritance Tax?

The best way to reduce Inheritance Tax will depend on your personal circumstances and how you would like to provide for your family in the future. What is right for one person might not be ideal for someone else, so you will need to give the matter careful consideration.

For example, giving away money during your lifetime is one option. But if you have a relative who is likely to spend it unwisely or who is facing bankruptcy or going through a divorce, giving them a lump sum will not be advisable.

The main ways to reduce Inheritance Tax include:

  • Putting assets into a trust
  • Leaving your estate to your spouse
  • Giving money and assets away during your lifetime
  • Leaving a property to your children or grandchildren
  • Deed of variation if you have inherited money.

Putting assets into a trust

There are various types of trusts which have different tax rules.

It’s important that you fully understand the implications of putting assets into a trust as you may not be able to undo this.

Leaving your estate to your spouse

There is no Inheritance Tax payable on the part of your estate left to your spouse. In addition, if your estate does not use your Inheritance Tax allowances, then the unused portion can be transferred to your spouse’s estate in due course.

Giving money and assets away during your lifetime

One of the most effective ways of passing on money without needing to pay Inheritance Tax is giving away assets during your lifetime. You need to note that gifts over a certain value given away in the last seven years before death may still be liable for Inheritance Tax, however. There is more about this below.

If you are planning on passing on substantial sums, you need to make sure there are no reasons why this might not be a good idea. For example, if someone is not particularly good at managing money, giving them a lump sum is likely to be problematic.

If someone is facing a divorce or bankruptcy, the money you leave them might end up being passed on to someone else. A trustee in bankruptcy will use the money to pay off creditors, while a family law court can take all assets into account when splitting matrimonial funds.

Where an individual is receiving means-tested benefits, receiving a lump sum could mean that they lose these benefits.

In all these cases, putting money into a trust may be the answer. You should take professional advice to ensure that the right type of trust is set up and that the money is safeguarded as far as possible.

Leaving a property to your children or grandchildren

Leaving a property in your will to your direct descendants, such as your children or grandchildren, will increase your Inheritance Tax allowance by £175,000. Again, any unused allowance can pass to a spouse’s estate in due course. This means that for a couple, the total property allowance is potentially £350,000. Together with the joint nil rate band of £650,000, this makes a total potential allowance of £1 million.

Deed of variation if you have inherited money

If you have inherited money that you do not need yourself but that you would like to pass on to your children, it may be possible to have a deed of variation executed. This is a deed varying the terms of the will under which you received the money so that it goes straight to your children instead. In this way, the money would never pass to you and so your estate would not be at risk of having to pay Inheritance Tax.

How much money can be legally given to a family member as a gift UK?

If a gift is given away less than seven years before death, Inheritance Tax may be payable on the gift if the estate is above the Inheritance Tax threshold.

The rate of tax is on a sliding scale, as follows:

Years between gift and death Rate of tax on the gift
3 to 4 years 32%
4 to 5 years 24%
5 to 6 years 16%
6 to 7 years 8%
7 or more 0%

Gifts include any assets of value, such as property, jewellery and furniture. If you retain any value in the gift, then it will be deemed a ‘gift with reservation of benefit’ and could still be included in the value of your estate. For example, if you give away your property but still live there rent-free or for a rent that is lower than the market rent, then this is a gift with reservation of benefit.

There are some exemptions in respect of gift giving. You can give away up to £3,000 each tax year without any risk of them being added to the value of your estate for Inheritance Tax purposes. Any unused allowance can be carried forward to the next year, but no further than one year.

You can also give other gifts of up to £250 to as many different people as you want as well as birthday and Christmas gifts given from your income.

You can give gifts to someone who is getting married or entering into a civil partnership without tax implications, as follows

  • £5,000 to a child
  • £2,500 to a grandchild
  • £1,000 to anyone else

Money regularly paid to support someone is also tax-free, provided that it is paid from your regular income, and you can afford the payments as well as your living costs. An example would be financially supporting your child or an elderly relative.

Can a solicitor advise on Inheritance Tax?

Expert trusts and Inheritance Tax planning solicitors can advise on Inheritance Tax and structuring your estate in the most beneficial way possible. It is an exceptionally complex area of law however, and you should ensure that you speak to an experienced practitioner with genuine expertise in offering an Inheritance Tax planning service.

How will Inheritance Tax affect my business?

If you own a business, this will be included in the value of your estate for Inheritance Tax purposes. However, business relief may be available, depending on the nature of the business.

To qualify for business relief, the business or asset must have been owned by the deceased for a minimum of two years before the date of death.

Does Inheritance Tax apply to foreign assets?

If the person is domiciled in the UK, Inheritance Tax applies to all assets, including those located overseas. However, if there is a similar tax in the relevant country, double tax relief may be available so that the tax will only be payable once.

If you do hold overseas assets, you need to take great care to ensure you have a will in place that deals with them and that you fully understand the inheritance rules of that country.

Can you avoid Inheritance Tax with a trust?

Funds paid into a trust will not be counted as part of your estate if they were transferred in more than seven years prior to death, and you have not kept an interest in the trust. However, trusts are liable to pay other taxes. For this reason, you must ensure that you take expert Inheritance Tax planning advice to make sure that the type of trust you are considering will be beneficial.

What is a trust?

A trust is a legal relationship where somebody (trustee) is holding assets that do not belong outright to them. They are holding the assets ‘on trust’.

How do I set up a trust?

The three most common ways that a trust is created are:

  • Where somebody decides to put assets into a trust during their lifetime
  • When somebody dies and their will creates a trust
  • When somebody becomes entitled to some assets, but they are too young to receive them, such as when somebody dies without a will and a child is one of the beneficiaries.
What different types of trust are there?

There are many different types of trust. The most common are:

  • A life interest trust where somebody is entitled to benefit from an asset during their lifetime and it then passes to somebody else. These are very commonly used for properties
  • A discretionary trust where the trustees have discretion as to when and how the beneficiaries can benefit from the trust. These are extremely flexible
  • Bare trusts where the beneficiary is the owner of the property, but it is held in somebody else’s name, perhaps because they are under 18
  • Trusts of land where the legal owners of a property are holding the property on trust for either themselves or others.
What are the benefits of having a trust?

Trusts are used for a wide variety of reasons and can have lots of different benefits. These can include:

  • Protecting assets from being used to pay for future care costs
  • Protecting assets from beneficiaries who may be unable or unsuitable to manage the funds themselves
  • Preventing assets from affecting beneficiary’s entitlement to means-tested benefits
  • Allowing trustees to decide when children are mature enough to benefit
  • Prevent assets from being involved in a beneficiary’s divorce settlement
  • Avoiding or reducing tax.
What are the disadvantages of having a trust?

Trusts always require a certain amount of setting up and administering. Exactly what is involved will vary from trust to trust. When creating a trust, you must always consider whether the added complication and cost will be outweighed by the benefits the trust will bring.

The tax treatment of trusts is quite complicated, so you need to fully understand the implications before creating a trust.

Who should the trustees be?

As the name suggests, you should appoint people who you trust to carry out the role. They should be competent at carrying out the various duties the role brings and, if you are appointing more than one trustee (which is always advisable), you would preferably appoint people who will be able to work well together.

 

You should consider any conflicts of interest that may arise, particularly if the trustees or their friends or family are also beneficiaries. There are often good reasons to appoint a professional trustee. If you are creating a trust during your lifetime, you may also want to consider if you want to be a trustee yourself.

 

Wills and Probate Team

Andrew Milburn

Partner

0113 532 7189
 amilburn@levisolicitors.co.uk

Andrew is a partner and head of our wills, probate and estate administration department. Read More.

Connor King

Solicitor

0113 468 4097
 cking@levisolicitors.co.uk

Connor King is a solicitor in our wills, probate and estate planning team. Read More.