Family members are expected to hand out a record £9.8 billion to their children in 2021, according to forecasts by estate agency Savills. The Bank of Mum and Dad, and its counterpart the "Bank of Grandma and Granddad", has been heavily relied upon thanks to extortionate house prices, but generous benefactors should be aware of tax traps along the way.
For generations the notion of trusts have been associated with the super-rich and their popularity has waned in recent years. However, they can be a handy means of managing inheritance tax for parents or grandparents hoping to ring fence wealth for a loved one's future.
Putting money into a trust, as opposed to straightforward gifting, also protects against the risk of funds being squandered by young beneficiaries or lost to failed relationships.
Russell-Cooke partner Clare Jeffries comments in The Telegraph outlining the various benefits of trusts in terms of Inheritance Tax planning, avoiding tax traps and maintaining control of the funds.
Help your children buy a home – and dodge inheritance tax in the process is available to read on the Telegraph website via subscription.
Clare Jeffries is a partner in the private client team. She advises a broad range of families and individual clients on wills and administration of estates with a particular emphasis on inheritance tax planning. Clare sets up trusts and advises on their running, regulation and administration.