Lifetime Tax Planning

Our Inheritance Tax planning Solicitors are experts at helping you reduce the amount of Inheritance Tax your loved ones will have to pay by guiding you through the different lifetime tax planning options.

Making lifetime gifts of your surplus income

The ‘normal expenditure out of income’ exemption from Inheritance Tax allows lifetime gifts of an unlimited amount provided they meet the set of qualifying criteria.

A claim for this type of exemption is made following the death of the donor, and if the claim is successful, the gifts made will not form part of the estate for Inheritance Tax purposes.

For gifts to qualify for an exemption, you must be able to show that the payments are made out of your ‘surplus income’ after all your usual costs of living.  Income can include employment income and investment income.  It also includes non-taxable income such as from ISAs.

There must also be an intention for gifting to be regular.

You may gift the surplus income directly to individuals, or to a lifetime trust for a group of different beneficiaries.

Use of lifetime trusts

A useful tool for Inheritance Tax (IHT) planning is the use of lifetime trusts as they have beneficial qualities, such as the ability to retain control of the assets given away, tax benefits, asset protection and second generation IHT planning.

By making a gift of assets to a trust for a group of beneficiaries (for example, your children and grandchildren) rather than outright to individuals, your assets are protected as there is a reduced risk that the assets will be lost in the event of divorce or bankruptcy of those you want to provide for.

Trusts are incredibly useful for second generation IHT planning, as the assets held in trust are also outside of the estate of the beneficiaries for IHT purposes, meaning that they will not increase their own IHT liability on death.

Disabled person’s trust

You may set up a disabled person’s trust for someone, either as a lifetime trust or in your Will on your death. The trust must meet statutory requirements and can have tax advantages for Inheritance Tax, Income Tax and Capital Gains Tax depending on individual circumstances.

Our team of specialist lifetime tax planning Solicitors have vast experience in successfully handling a wide range of cases and legal matters, and can provide expert advice and guidance for anyone looking for help around lifetime tax planning.

Get in touch with the team on 01202 525333 for specialist advice and guidance today.