Separated Parent...planning for my son if I go...
Discussion
About 15 months ago I became a single Dad, not by choice at the time. I wasn't married so financially I won't be too clobbered, and after months and months of legal "fun" things are hopefully reaching a conclusion. The house I owned jointly with my ex is on the market, it was a self-build so there will be significant equity (either as is or when I buy a new place). There are some other assets, plus a death in service benefit from my current employer (and no doubt future if I change jobs).
I'm 46, my son is nearly 4. As things stand at the moment, I'd want everything to go to him in trust. but I have no idea how to do this. I'm an only child, so TBH I have no idea who I'd get to sort everything if I did shuffle off anyway, although I am hoping this will change...I was lucky enough to meet someone shortly after becoming single, and things are steady and solid.
What's my best course of action here?
I'm 46, my son is nearly 4. As things stand at the moment, I'd want everything to go to him in trust. but I have no idea how to do this. I'm an only child, so TBH I have no idea who I'd get to sort everything if I did shuffle off anyway, although I am hoping this will change...I was lucky enough to meet someone shortly after becoming single, and things are steady and solid.
What's my best course of action here?
Hard-Drive said:
What's my best course of action here?
1. Have a read around this forum for a bit.2. Avoid trusts, and taking this theme one step further
3. Avoid getting fleeced by sharp-suited and silver-tongued advisors of 1,000 flavours.
You're likely to end up looking at simple, cost-effective things along the lines,
£3,000 p.a. IHT tax free gift allowance
Child SIPP (pension £2,880 net p.a.)
Child ISA
....and write a decent Will.
Do you have any life insurance? Perhaps bump this up or take a fresh one out for 14-18 years (college/uni age).
Perhaps add it in the will separately, you could even apportion it percentage wise on a sliding scale, to mum and son. If you died tomorrow is mum going to be 100% OK financially raising him? She may need some assistance and a large sum waiting for son at a certain age while they both struggle through the years before could be straining for them both.
It may be too early, I don't know any history sorry, but if you go no one will care more for your son than his mum, so consider that however painful! The life insurance means it only happens in the worst case when you won't care and it was never money you could ever get hold of.
Perhaps add it in the will separately, you could even apportion it percentage wise on a sliding scale, to mum and son. If you died tomorrow is mum going to be 100% OK financially raising him? She may need some assistance and a large sum waiting for son at a certain age while they both struggle through the years before could be straining for them both.
It may be too early, I don't know any history sorry, but if you go no one will care more for your son than his mum, so consider that however painful! The life insurance means it only happens in the worst case when you won't care and it was never money you could ever get hold of.
layercake said:
2. Avoid trusts, and taking this theme one step further
are these expensive to setup is that the reason to avoid them ?
are these expensive to setup is that the reason to avoid them ?
- Tax rules can change very easily at the next chancellor's budget.
- There are always costs to set up.
- There are always costs to run - including accounts and tax return.
- Once you're in a trust situation there's really no way to escape ongoing fees.
- Who will be the trustees? You can bet your life any professionals involved will want to be paid.
- There are likely costs around dealing with the investment side as well.
Depending on your situation there's a certain amount to be said for a "nil rate band" trust during your lifetime which essentially refreshes your £325k IHT allowance every 7 years. You need to be pretty flush to be looking at those sorts of numbers. And you're still at risk regarding future changes to the law.
For instance, once stuff went into trust you used to be away and clear from IHT. These days many trusts are hit with 10 year anniversary IHT charges. The tax payable may not be large but somebody will want paying to sort out all the detail and complete the tax return....
Thanks guys. TBH I'm really needing simple noddy advice here, the tax efficiency stuff is the next stage.
I guess I need to know who has control of his money, the very simple mechanics of how this should work. Let's say we're 10 years down the line and I've shuffled off. He's still only going to be 13, and let's say in receipt of a good few hundred k of property/funds etc. I don't have any brothers/sisters, so no-one who I can entrust with this, friends can come and go and also depart this earth so that's tricky. I may well have married by then so may have a wife/widow who could look after things for him, but I need to think of the here and now.
I get the point about his mum, however whilst I'd hope she'd not be raiding the piggy bank, I don't know that for sure. Do I nominate a solicitor or a company or equivalent who can manage this?
Right now, my work DIS benefit goes 50/50 to his mum and him, although I want to change that. Even if I said 100% to him, how does this actually work?
I guess I need to know who has control of his money, the very simple mechanics of how this should work. Let's say we're 10 years down the line and I've shuffled off. He's still only going to be 13, and let's say in receipt of a good few hundred k of property/funds etc. I don't have any brothers/sisters, so no-one who I can entrust with this, friends can come and go and also depart this earth so that's tricky. I may well have married by then so may have a wife/widow who could look after things for him, but I need to think of the here and now.
I get the point about his mum, however whilst I'd hope she'd not be raiding the piggy bank, I don't know that for sure. Do I nominate a solicitor or a company or equivalent who can manage this?
Right now, my work DIS benefit goes 50/50 to his mum and him, although I want to change that. Even if I said 100% to him, how does this actually work?
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