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Winnell Douglas Limited take the view that the well established
principles of Trusts stated above offer powerful reasons to consider
the use of Trusts.
We believe that Trusts, a much-underused facility, could achieve
the three objectives given above in most circumstances. It is for
these very reasons that when considering our clients current and
future financial needs, we ensure that the appropriateness of using
Trusts are considered.
Right Money
This encapsulates the principle that as much of the "money"
as could be passed to a relative or dependent, does actually arrive
with them. Trusts offer major tax planning opportunities in terms
of Income, Capital Gains and Inheritance Tax planning.
Right Hands
Trusts state either in specific or general terms, who should benefit
from their assets. When setting up a Trust it is possible to identify
an individual or individuals who are to benefit either initially
or as a residual beneficiary. Groups of people such as children
or grandchildren can also be the beneficiaries; in particular when
discretionary trusts are being set up. In such a way, grandparents
could take into account children who may not have been born at the
time the Trust is being created. The creator of the trust (the settlor)
can also be a trustee, thereby retaining some control of the assets
and the nomination of beneficiaries.
Right Time
One of the most reassuring benefits of Trusts is their ability
to pay out their assets direct to the beneficiaries outside of the
settlors estate. The effect being that rather than waiting for the
finalisation of an estate, which usually takes months and can sometimes
take years, assets can be transferred to beneficiaries in a matter
of days.
NB. It is worth remembering that Trusts can be applied to existing
assets, such as life assurance policies and do not have to be set
up at the same time as the policy is created. Perhaps you should
review your own situation with regards to Trusts or lack of them.
Taxation
When considering our client’s financial situation, we aim to take into account the effects of the three main taxes, which are likely to have an effect on individuals. These are Inheritance Tax (IHT), Capital Gains Tax (CGT) and Income Tax.
IHT
We regard this as a core aspect of our work. Most clients are keen to reduce the amount of IHT paid by their family on their death. Our experience has shown that careful planning can often help to dramatically reduce the amount of IHT a family has to pay. In many cases, encouraging our clients to draw up new wills offers the opportunity to save a considerable amount of IHT, whilst at the same time not restricting financial support for the surviving dependants.
CGT
The annual CGT allowance is probably the most underused allowance available to investors. When undertaking an initial review of a client’s financial situation, or when carrying out ongoing reviews, we have found that taking a proactive management approach to the annual CGT allowance can often reduce the tax which is paid.
Income Tax
We have identified several opportunities for reducing income tax on investments. Careful long term planning should allow most investors to benefit.
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