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Trusts are the perfect solution

Until now, the Government has been merely tinkering with inheritance tax legislation. To achieve its target of boosting IHT revenue from 3bn to 10bn a year will require a massive overhaul that will mark the end of many standard estate planning methods. The implications for individuals with an estate over the 275,000 threshold are significant.

With standard tax avoidance options (from potentially exempt transfers to deeds of variation) now on borrowed time, individ-uals need to consider the use of trusts to ringfence their chosen beneficiaries’ inheritance while safeguarding their own lifetime financial security.

Despite the widespread perception that trusts are complex and expensive to set up and manage, they are in fact the perfect, flexible solution for estate planning. Simple to arrange and with annual fees of no more than about 500, trusts provide an opportunity to safeguard assets for children and grandchildren while enabling the settlor to retain control.

Critically, a trust can be broken at any time, providing the flexibility required for an evolving estate planning strategy.

Unfortunately, misinformation and misunderstanding about inheritance tax legislation is widespread, resulting in expensive mistakes that not only add to the Government coffers but also undermine financial security.

Good estate planning is not about buying insur-ance products to cover the expected IHT liability. It is about understanding the needs and expectations of individuals and accommodating their wishes and concerns about family members within a flexible, regularly reviewed strategy .

Peter LeggHead of inheritance tax planning matters,



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