Don't leave it too late to pass on your inheritance
There was still an awful lot to decide, such as who gets what, and how to minimise exposure to death duties or inheritance tax. But the assumption was that money and assets would only transfer after you’d gone. That’s not the case today. Increasingly, grandparents and even parents are looking to pass money to loved ones while still alive. There are benefits for the person doing the gifting, as they get to see their wealth do some good for the people they love. You can also help ensure the beneficiary deploys your money wisely.
TL;DR
- Gifting assets during one's lifetime offers benefits like seeing wealth used wisely and potential tax advantages.
- Gifts are generally treated as potentially exempt transfers for inheritance tax (IHT) if the giver survives for seven years.
- Key considerations include ensuring sufficient funds for oneself, potential family friction from unequal gifts, and the recipient's readiness for the money.
- Trusts can be useful for managing gifts to younger or financially inexperienced individuals, but come with their own tax and legal rules.
- Future changes to pension death benefits (from April 2027) may affect inheritance tax calculations.
- Proper record-keeping of gifts is essential, especially if the giver dies within seven years.
- Careful structuring is needed to account for potential divorce or impact on means-tested benefits.