A question of trust! How to keep your inheritance secure
Increasing numbers of people are getting married later in life, often for a second time, but what financial impact could this have on children from an earlier marriage?
Data from the Office for National Statistics (ONS) shows the number of brides and grooms aged 65 and over went up by 46% in a decade, from 7,468 in 2004 to 10,937 in 2014.
It is nice to find happiness at any age and in many cases the nuptials are a second marriage.
The ONS research shows 92% of the brides and grooms aged 65 and over in 2014 were divorcees, widows or widowers, with only 8% getting married for the first time.
This may mean there are children from the first marriage who could need protecting financially.
A new family brings new responsibilities and with more older people taking the plunge for a second time, there may be inheritance issues to consider so both a second spouse as well as children from an earlier relationship are protected.
A will is one way to ensure you can set out what you want to happen to your assets once you pass away but another more tax-efficient method alongside this is to set up a trust.
Research by the Society of Trust and Estate Planners found more than half of members have seen an increase over the past five years in customers using trusts.
STEP says a trust can, for example, be used to provide for a spouse after death, while also protecting the interests of children from a previous marriage or relationship.
What is a trust?
A trust is a legal entity that secures assets such as money for other people to access at a set point. For example, you could put a set sum in trust for children once they reach age 18.
Putting money into a trust can be beneficial for inheritance tax planning as it means it no longer belongs to you so won’t form part of your estate when you die. This should reduce your inheritance tax bill.
Most parental trusts that have children as the recipients or beneficiaries are known as bare trusts.
As long as the person making the transfer survives for seven years after there should be no inheritance tax to pay.
It is always important to get legal advice when setting up a trust.
Speak to your financial adviser for support on inheritance tax planning.
- HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen