Widowed person with current assets of around £2 million
The plan is quite complex due to the size of the estate. However by dealing with in in stages together with the client’s sons meant the clients were able to achieve all their objects of eliminating their IHT liability, not funding their sons lifestyle to too high a degree and protecting the whole estate and keep the money in the family bloodline. They also had unexpected benefits of saving a lot of income tax.
She used £325,000 of her late husband’s allowance and now only had an allowance of £675,000 but her Estate had also dropped to £1.485,000
The gifts of£325,000 into trust, £100,000 into offshore bond in her grandchildren’s names, and £500,000 to her two sons reduced Mrs James Estate down to £560,000 after 7years. This means her estate without any growth would be £115,000 below her allowances. Therefore, her home could still grow over time and so the IHT billwas likely to be very low or non-existent on her death.
Her sons used the£250,000 each to pay down their own mortgages which helped them over the coming years to save more into their own pensions.
Her sons did not have to use their own income or capital to fund their children’s university education.
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