Silver lining for some Individuals?
There's no doubt that the recession is a very dark cloud indeed. Deloitte economic adviser Roger Bootle forecasts that the UK will not start to resume growth until 2011. House prices have dropped by 30% in many places and some other assets have also declined substantially in value. Whilst these major changes are negative for most of us, a decline in asset prices may offer an opportunity for some individuals and families to pass on assets to the next generation, whilst minimising current and future inheritance tax charges.
Some entrepreneurs are thinking carefully about passing on shares in family companies to benefit their children and grandchildren and there are a number of different ways in which this can be done.
Gifts can be made to adult children, but often gifts to family discretionary trusts may be preferred, especially where shares in investment companies are involved. In any event the gifts must be made without strings in order to avoid having to tax the property as part of the donor's estate on death. Where investment companies are involved a husband and wife could, between them, transfer assets worth up to £624,000 to a discretionary trust, free of inheritance tax provided their nil rate bands remained unused.
There can be complicated capital gains issues and proper tax and legal advice is always recommended.
