Glenda was recommended to Foresight by a friend following the death of her husband. Her husband had recently died and she knew that, on her subsequent death, the children would be left with a significant Inheritance Tax liability.
Glenda also had concerns about protecting the wealth she would be passing on, due in part to one of her Son in Laws. Her daughter and husband had a history of marital breakups and Glenda wanted to ensure that the inheritance she and her husband had worked so hard for would not would not be lost to sideways disinheritance, if anything were to go seriously wrong with the relationship in the future.
We implemented discretionary trust planning around the estate in order to achieve her aims of both wealth protection and preservation. Firstly, this was achieved through a deed of variation trust, which utilised the two-year window following the passing of her late husband in which his wishes can be altered. This involved the re-writing of the late husbands will, to divert some of the holdings away from client A and into a trust instead. Once outside of the estate and with client A not needing the funds, these holdings grew without their value impacting the children on her death.
In order to further protect the holdings, client A also implemented discretionary Trusts around her own residual estate. On her death, funds pass via a re-written will into a trust rather than directly to her beneficiaries. This did not mean her daughters could not access the funds, indeed they could, it was just done by a loan from the trustees. This has the effect of protecting the inheritance from any subsequent divorce her daughter may experience, as the loaned funds are recalled by the trustees prior to any court proceedings.
Client A still found herself with an inheritance tax issue though, despite her diligent trust planning. We went some way to mitigating this through the use of Business Property Relief. We used an investment which meant that after only 2years the holdings were exempt from IHT, whilst also allowing for growth in value and maintenance of control over the money by the client. On her passing the children then sold the shares and divided the initial contribution which would have been subjected to 40% tax, along with the investment growth.
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