Inheritance – Generation Skipping
Gavin Barwell, the new housing minister, has urged grandparents to consider leaving their property to their grandchildren.
He pointed out that the younger generation are finding it increasingly difficult to get on the property ladder and, by skipping a generation, grandparents can make a real difference to the lives of their grandchildren. In fact, his own mother has rewritten her will to leave her £700,000 house to her five grandchildren.
This is all very well if the grandparent is confident that their children are financially secure and would not benefit from assistance themselves, and/or the grandchildren are sensible enough to receive large capital sums at what could be a fairly young age.
In the right circumstances, generation skipping in wills can be extremely effective from an inheritance perspective as it avoids the risk of assets being taxed twice (in both the grandparents estate and that of their child’s when it is eventually passed to the grandchildren). However, to build in an element of flexibility, and because we can never predict accurately what the future may bring, we would advise clients to consider leaving their estate to a family discretionary trust in this scenario.
With a discretionary trust, both the children and grandchildren can be named as potential beneficiaries. However, the decision as to who benefits, and when, can be made based on the circumstances and needs of the family at the time, rather than being taken in advance.
Whatever your circumstances, it is essential to review your will at least every five years, and whenever your family circumstances change. To review your situation, and to consider your options, contact our Wealth and Tax planning specialist, Eleanor Gadd, who would be delighted to assist you.
For more information please contact Eleanor Gadd, Associate, Private Client.
Published: 11 Oct 2016