Discretionary investment management and Lasting Powers of Attorney
Given the events of the past year, it is likely that we are going to see changes to inheritance tax and capital gains tax in the future. The Office of Tax Simplification and the All-Party Parliamentary Group have made a number of suggestions, which I will not go through at length here. However, the following may be of particular relevance to many:
In light of these proposed changes, here are a few estate planning steps that might be worth considering sooner rather than later:
CGT appears to be an easy target for reform. If you are thinking about giving away or selling assets standing at a significant gain, now may be a more favourable tax climate in which to do this.
Business Relief has been under scrutiny for some time. It can be argued that it has strayed from its original purpose of protecting vulnerable family businesses, given that it is available to many large, well-established companies, such as some of those listed on AIM.
We do not know if Business Relief will be around forever, or if it will remain in its current form. It may therefore be worth triggering the relief now through a gift of assets to a trust or other structure for the benefit of the family and future generations.
Gifting has always been a straightforward way of reducing a future IHT bill. Outright gifting keeps things simple and involves minimal cost and administration. Such gifts however provide no control or protection for the donor, which is something that has become increasingly important in these uncertain times.
Gifts to a trust or vehicle such as a Family Investment Company can however be very useful options for asset preservation and succession. The current relatively benign tax climate makes these options more affordable.
Asset protection has become more of a focus than ever before. A simple, “everything to the surviving spouse, then to the children” Will may still be appropriate for some. In most cases however, structures such as life interest or discretionary trusts, together with an accompanying letter of wishes, provide maximum flexibility and serve to protect assets for future generations.
Most of the options outlined above are not new. However, as we navigate through these difficult times and question what the future holds, now could be a good time to future-proof your position so far as possible.
For further information, you can watch a webinar by Stephanie Mooney and James Ward for LexisNexis on "Succession Planning" which was released on 8 December 2020.
(Subscription to LexisNexis required)
If you have any questions about the issues covered in this blog, please contact a member of our private client team.
Skip to content Home About Us Insights Services Contact Accessibility