Discussion
Evening all,
I am going to be a Trustee for a Trust which is being set up for the family. One of the other T'tees is my grandmother who thinks it's too good to be true - because of the tax/other benefits.
I'm looking to source some info for her from a known body (FoS or something) which gives her the details of a Trust in an easy to understand way.
It'll help to back up what the advisor is saying.
Anyone know of a good source?
Thanks,
I am going to be a Trustee for a Trust which is being set up for the family. One of the other T'tees is my grandmother who thinks it's too good to be true - because of the tax/other benefits.
I'm looking to source some info for her from a known body (FoS or something) which gives her the details of a Trust in an easy to understand way.
It'll help to back up what the advisor is saying.
Anyone know of a good source?
Thanks,
which specific bit does she think is too good to be true? It might not be nowadays!
www.step.org is a good place to start for info
e.g. http://www.step.org/PDF/Trusts_Explained.pdf
or HMRC
http://www.hmrc.gov.uk/trusts/index.htm
www.step.org is a good place to start for info
e.g. http://www.step.org/PDF/Trusts_Explained.pdf
or HMRC
http://www.hmrc.gov.uk/trusts/index.htm
Thanks for those.
Essentially...
Due to their current financial set up, they receive a number of old-people G'ment benefits (~£800/month). It has been suggested to place the additional lump sum into a trust to prevent this changing their G'ment income - as it's means tested.
However, my grandmother feels this is a bit too easy to be legal (she still thinks there is something iffy about it). So I'm trying to find details which I can print from somewhere she'll recognise (HMRC for example) which will give her some peace of mind, and back up what the accountant/FA are saying.
Not that she's paranoid!
Essentially...
Due to their current financial set up, they receive a number of old-people G'ment benefits (~£800/month). It has been suggested to place the additional lump sum into a trust to prevent this changing their G'ment income - as it's means tested.
However, my grandmother feels this is a bit too easy to be legal (she still thinks there is something iffy about it). So I'm trying to find details which I can print from somewhere she'll recognise (HMRC for example) which will give her some peace of mind, and back up what the accountant/FA are saying.
Not that she's paranoid!
Sounds like they're talking about placing money into an Insurance Bond, either onshore or offshore, within the trust vehicle.
The essential advantage being the Insurance Bond is a non income producing asset as far as the tax man is concerned, although you can take a withdrawal of up to 5% pa, tax deferred, of the original capital to use to fund your lifestyle and 'income' needs. Hence, when means testing your taxable/assessable income is lower.
However, my understanding is that, in the case of Long Term Care (LTC) provision for example, if income is already being drawn then it can be assessed. It only prevents assessment if income is not being drawn at the point of the assessment.
Also, with LTC you need to have a reason for the trust/bond arrangement. If there's an IHT liabilty not an issue otherwise the local auuthority, and they are the who look into this, with very little definition of how they do so, can ask why have you placed the funds in trust and can still take the funds into account.
I would suggest that you get a clear picture of what the full reasoning is on this and ensure the IFA is on a fee basis. Trusts holding bonds can be very expensive as they can pay oodles of commmission, not that this could effect the advice at all.
The essential advantage being the Insurance Bond is a non income producing asset as far as the tax man is concerned, although you can take a withdrawal of up to 5% pa, tax deferred, of the original capital to use to fund your lifestyle and 'income' needs. Hence, when means testing your taxable/assessable income is lower.
However, my understanding is that, in the case of Long Term Care (LTC) provision for example, if income is already being drawn then it can be assessed. It only prevents assessment if income is not being drawn at the point of the assessment.
Also, with LTC you need to have a reason for the trust/bond arrangement. If there's an IHT liabilty not an issue otherwise the local auuthority, and they are the who look into this, with very little definition of how they do so, can ask why have you placed the funds in trust and can still take the funds into account.
I would suggest that you get a clear picture of what the full reasoning is on this and ensure the IFA is on a fee basis. Trusts holding bonds can be very expensive as they can pay oodles of commmission, not that this could effect the advice at all.
Proceed with caution, its easier to set up a trust than to undo it.
Losing control of the money is often more of a worry for older people than anything else. If that is reconciled in their mind, a trust is often more complex and expensive than alternatives that could achieve the same end.
Without knowing the specifics i cant advise specifically but, for instance, she could simply gift the money to her heirs.
There are other options too
Generally trusts are more complex, more expensive and more likely to be viewed at some point as an evasion mechanism than many other options.
A trust might be exactly right for your circumstances, but it might not. Ask questions and proceed only when all concerned are certain it is..... that's my recommendation
Losing control of the money is often more of a worry for older people than anything else. If that is reconciled in their mind, a trust is often more complex and expensive than alternatives that could achieve the same end.
Without knowing the specifics i cant advise specifically but, for instance, she could simply gift the money to her heirs.
There are other options too
Generally trusts are more complex, more expensive and more likely to be viewed at some point as an evasion mechanism than many other options.
A trust might be exactly right for your circumstances, but it might not. Ask questions and proceed only when all concerned are certain it is..... that's my recommendation
JPJPJP said:
Proceed with caution, its easier to set up a trust than to undo it.
Losing control of the money is often more of a worry for older people than anything else. If that is reconciled in their mind, a trust is often more complex and expensive than alternatives that could achieve the same end.
Without knowing the specifics i cant advise specifically but, for instance, she could simply gift the money to her heirs.
There are other options too
Generally trusts are more complex, more expensive and more likely to be viewed at some point as an evasion mechanism than many other options.
A trust might be exactly right for your circumstances, but it might not. Ask questions and proceed only when all concerned are certain it is..... that's my recommendation
Sound advice. Losing control of the money is often more of a worry for older people than anything else. If that is reconciled in their mind, a trust is often more complex and expensive than alternatives that could achieve the same end.
Without knowing the specifics i cant advise specifically but, for instance, she could simply gift the money to her heirs.
There are other options too
Generally trusts are more complex, more expensive and more likely to be viewed at some point as an evasion mechanism than many other options.
A trust might be exactly right for your circumstances, but it might not. Ask questions and proceed only when all concerned are certain it is..... that's my recommendation
It is very difficult to give away responsibility over investments and still retain control. Tax avoidance and Trust benefits are disliked by the Inland Revenue and subject to increasing investigation. The Benefits Agency and local authority finance staff are also much more on the ball than they were.
You may be well advised by you professionals but I would double check everything. I have seen a number of these schemes come adrift in recent years.
JPJPJP said:
Proceed with caution, its easier to set up a trust than to undo it.
......, she could simply gift the money to her heirs.
I have been searching for similar advice in setting up a trusts, and have realised that gifting the money away, is both easier and less complex. I now just hope i either last the next 7 years, or that i fit within the deep freeze......., she could simply gift the money to her heirs.
Any recommendations on a Bristol, London based adviser would be helpful.
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