Inheritance can be a tricky thing to set up and manage. As well as navigating all the pitfalls of the law, what you can and cannot do, and what your tax bill may be at the end of it all, there is also the matter of considering managing family expectations or working around problems within families. To set things into some context, a survey by Sunlife insurance found that 70% of grandparents would like to leave an inheritance for their grandchildren but don’t always trust their own children to pass that on. The reasons may not matter, but the point is that there must be ways for them to do so if that is their wish. This month we look at what your options are and how you can set up your inheritance in the way that you want.
Money and valuables
If it is money or other valuables that you wish to leave to your grandchildren, then that can be written into your will directly. Appoint an independent executor – this could be someone outside the family who you trust or a professional such as your probate lawyer or a professional executor – who will carry out your wishes by circumnavigating those family members you are unsure of being able to do so. Depending on the age of the grandchildren you may have to place items or money in trust – talk to your advisor for personalised advice.
This is where it can get a little trickier. If your grandchildren are over the age of eighteen, then you can write them directly into the will and leave the property to them. However, if they are under eighteen then they are not yet legally allowed to own property. There is a way to work around this though. Consider creating a trust which can then be written into your will. There are a few things to keep in mind with trusts:
- Consider at what age it would be appropriate for your grandchildren to inherit the property. It should be an age at which they can use it wisely, but not too old that it is no longer as useful for them – for example, they may move away to university or seek work in a different city or country making it difficult for them to manage it or make use of it themselves. This is known as an age-contingent trust. Speak with your advisor or family, if appropriate, to help you determine what that age should be.
- Inheritance tax and trusts. Assets left in a trust can attract an inheritance tax charge of up to 6% of the value of the trust every 10 years. This may be less important to you than ensuring the property goes to your grandchildren, but it is something that you will need to plan for so that they do not end up with a big tax bill as well. Putting together an effective estate plan can help to reduce that tax. Take a look at our previous article on this as a starting point or talk to your advisor for more details.
If you are looking for help and advice on preparing a will or how to structure it, get in touch with our team at Probate London. We are here for you whether it’s for an informal chat or a more formal appointment. You can reach us on firstname.lastname@example.org or by calling us on 020 8017 1029.