It is perfectly legal to make financial gifts to our children, but it is wise to seek advice says Sarah Cornish, Head of the Wills, Trusts and Probate team at Coodes Solicitors.
“With so much media attention on tax avoidance, it’s worth remembering that it is legal to give a gift to your children. Many of us would prefer to give some of our assets to our families while we are alive so we can watch them enjoy it, rather than leaving everything in a Will. However, there are potential pitfalls and tax issues to be aware of if you want to give away large sums of money, property or valuable possessions. For example, if you are making a substantial financial gift, the recipient may be liable for inheritance tax if you die within seven years of handing over the money.
“A surprising number of clients ask me if they can give their house to one of their children, to avoid them having to pay inheritance tax. However, this does not work for tax purposes if you continue living in the house and I would always advise clients to avoid making themselves reliant on their children.
“Some people find themselves in a position whereby their income covers their own living costs and have enough spare to make regular donations to a family member, usually children or grandchildren. These ‘gifts out of income’ are immediately exempt from tax if they are set up in the right way, but the rules are complicated.
“Everyone’s situation is different, so our dedicated team of trust and tax lawyers will advise you on appropriate trust law and the related tax implications. A number of us have been accredited by Solicitors for the Elderly and the Society of Trust and Estate Practitioners (STEP) and we are committed to providing older clients with the very highest standard of service.
“So, don’t rule out giving away money and other assets, but do ensure you seek legal advice before making any substantial gifts. Importantly, don’t leave yourself short – it’s important to ensure you are well looked after in your later years.”
For advice on any aspect on tax planning, making a will, powers of attorney or executing an estate please contact Sarah Cornish at Coodes Solicitors on 0800 328 3282 or email@example.com.