Take advice when making lifetime gifts
This article highlights the importance of taking advice before making lifetime gifts. The order in which you make the gifts can affect potential tax payable on them so when making gifts into trusts, it is important to consider if you are likely to make other gifts in the next few years and if so, the best order in which to make them.
Trusts are frequently used by ageing families and individuals for what accountants term “asset protection”. If you die within seven years of establishing the trust, the assets in the trust usually become taxable, as with any other potentially exempt transfer. But there’s a catch. If you die within seven years, other gifts that were made in the previous seven years before the establishment of the trust, also form part of the calculation of inheritance tax. In this way, gifts made up to 14 years before death can attract tax. You would not need to be either especially unlucky or especially wealthy for your estate to find itself stung in this way. It underlines the importance of receiving seriously copper-bottomed advice if you are doing anything other than basic inheritance tax planning. ”