Recent years have seen an increase in grandparents caring for their grandchildren, helping at home and helping with school fees. So, it’s no surprise that many grandparents wish to leave their assets to a grandchild or grandchildren, rather than their children.
But how can you transfer your assets to your grandchildren? Lifetime transfer of assets is legal, but the legal process can differ depending on the situation. Here are a few choices to consider when leaving assets to grandchildren.
Many trusts allow you to transfer assets easily, and some could be useful when transferring assets to your grandchildren and especially for minor children. The trust should be written into your will and age of access is always advised to be added that way you can control when your grandchild will inherit your assets.
Another option available to you is a discretionary trust, where it’s up to the trustees to decide who gets what and when. You can add your children, the parents, as trustees so they can access the assets provided the purpose is to benefit your grandchildren.
A trust can also be effective for transferring assets to an adult grandchild, by using a trust to do so you can reduce estate taxes and continue to have control on how your assets will be used even after you have passed away. There are specific trusts with benefits for grandchildren, ask us to get more details on all the options.
Gifting money to your grandchildren
Gifts are items of value, so don’t forget inheritance tax can be linked to gift-giving. Inheritance is tax paid by someone who has inherited property or money and the tax rate is 40%.
Grandparents can gift up to £3,000 in assets or cash each tax year without paying any inheritance tax. Gifts made three to seven years before your death are taxed on sliding scale, which breaks down like this:
You can also make gifts worth £250 each year that won’t be subject to inheritance tax, although if you have given your grandchild your whole £3,000 annual exemption that same grandchild can’t be given any more gifts without being subject to tax. Read more on inheritance tax here.
Whatever you decide- we are here to help, our team can give you advice on a wide range of specialist subjects, your options and what will work best for your specific needs.