Tax and Succession strategies for wealthy families - future proofing the family legacy.
Tax efficiency is one of the main drivers of intergenerational estate strategy and planning. Its foundation is a robust Will which sets out the framework for future planning not achieved during lifetime.
A basic Will should set out the following:
- Choose who will manage the administration of the estate (executors).
- Choose who can benefit and when.
- Appoint guardians for children until adulthood – otherwise Social Services may become involved.
- Prevent money from being inherited by undeserving family members.
- With the right advice and expertise, there is so much more a Will can achieve and it is all in the detail:
- Maximise Inheritance Tax reliefs and exemptions.
- Protection for complex family situations.
- Ensure through appropriate Trusts that wealth is not taxed again and again as it passes through the generations.
- Ensuring second or subsequent marriage does not disinherit the children of the former marriage or relationship.
- Preserve, protect and pass wealth to chosen beneficiaries.
- Provide for vulnerable or disabled family members.
Succession planning may involve measures as simple as making lifetime gifts and should always involve tax-effective Wills. Our expertise includes advising upon and drafting of Wills and the creation of Trusts, partnerships or company structures designed to determine the destination of assets during lifetime and on death and importantly, provide flexibility for a changing future.
Overseas Interests Non-UK Resident / Domicile
Clients with assets overseas may need advice on Wills and succession planning in that jurisdiction. Those who are UK Domicile are potentially liable to UK IHT on their worldwide estate. Even when they are non-Domiciled, their UK assets are likely to be liable to UK IHT. We liaise with overseas lawyers to ensure your clients have appropriate testamentary documentation in place to deal with non-UK assets.
Administration of Estates
When someone dies, dealing with their Estate can seem a daunting task. We have extensive experience in dealing with the legal and practical aspects of administering larger Estates and every degree of complexity. It can be an exceedingly difficult time for those directly affected and a sympathetic and common-sense approach is needed.
As a matter of course we advise how best to maximise tax reliefs during the period of administration of the Estate, for example claiming Business and Agricultural Property Relief on landed Estates.
Variation of Wills/Intestacy
In certain circumstances, it may be beneficial to vary the terms of a deceased’s Will to pass on assets to the next generation, into Protective Trusts or to postpone IHT using spouse exemption to allow time to mitigate IHT. It may also be possible to vary the intestacy provisions if the deceased left no Will. We advise on all aspects of such variations.
Probate Disputes
Without planning, disputes can arise. We advise on the best approach to achieve the desired outcome.
Tax and Succession strategies using Trusts.
What are Trusts?
Trusts are used to hold assets or property in safekeeping for others. A Trust is a legal arrangement which involves the transferring of legal title or assets to the Trustees for the benefit of others – the beneficiaries.
Trusts have an important role in asset protection and tax mitigation planning and flexibility is key.
A few benefits include:
Successful transition of business assets from generation to generation.
Keep wealth and assets in the family line and protect them from divorce or other claims.
Help minimise liability to tax as part of a tax planning strategy.
Make assets available to certain individuals or classes of people, e.g. children / grandchildren (even if not born yet) for intergenerational planning.
Plan how money and assets will be used in the future.
What are the different types of Trust?
There are various types of Trust including Discretionary Trusts, Interest in Possession Trusts, Trusts for children, Bare Trusts and Charitable Trusts. We advise on all Trusts including drafting, administering, amending, terminating and taxation of assets within a Trust. Discretionary and Life Interest Trusts are some of the most common.
We have a long-established reputation in this field and regularly advise on the creation and day-to-day running of Trusts for a wide variety of clients and their wishes and needs.
We consider how useful and appropriate an existing Trust is to individual circumstances. When it ceases to be useful, we advise on its efficient dissolution.
Tax – Maximising reliefs.
Tax planning involves financial analysis for the purpose of ensuring maximum legitimate tax efficiency.
In collaboration with you, their Accountant we identify and implement the most appropriate strategies. If your clients need to dispose of a business interest, property, or land, or as part of their general succession planning programme then we can assist you in the analysis, strategies and implementation.
Our advice may involve the consideration of Capital Gains Tax (CGT) Reliefs and holdover relief, Business Asset Disposal Relief (BADR) or Rollover Relief on the sale and replacement of business assets, or Business and Agricultural Property Relief from Inheritance Tax on the transfer of trading businesses or agricultural land.
There are more than 350 Tax relief allowances introduced by HMRC over the years but most need to be claimed and within certain timescales. Knowing what to claim, how to claim it and when to claim it will dictate the tax paid. The devil is in the detail so the sooner advice is sought, the greater the potential tax advantages may be.
Where clients have cross-border interests, we liaise with professionals to ensure a strategic solution, incorporating advice from multi jurisdictions.