I am buying a house for my children , I want no income or anything it is a simple gift , no mortgage , no rent and so forth .
My only concern is I do not want it to fall into the hands of a third party , boyfriends etc , my thought is to set up a discretionary trust .
Is this the simplest route and if so can anyone suggest what the approx cost of such a trust would be in terms of solicitors fees .
Thanks.
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Discretionary trust
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- Lemon Slice
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Re: Discretionary trust
Having spent the last few years as trustee for a trust for the children of a deceased friend, be very careful.
The taxation aspects are onerous, the law is complex and you may find the cost and complexity exceeds the benefit, I would take professional advice and consider whether you can get the same result by another means.
The taxation aspects are onerous, the law is complex and you may find the cost and complexity exceeds the benefit, I would take professional advice and consider whether you can get the same result by another means.
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- 2 Lemon pips
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Re: Discretionary trust
Thanks, for replies , have spoken to solicitors who would like 1250 plus vat for setting up , what made me smile was on the link for simply law there was an offer to download a document for 19.00 to create a trust .
on the taxation complexities I was hoping as there was no income involved there would be no problems other than as suggested in the link a IHT issue after ten years , although the solicitor suggested that if set up whilst alive then there would be no IHT .
on the taxation complexities I was hoping as there was no income involved there would be no problems other than as suggested in the link a IHT issue after ten years , although the solicitor suggested that if set up whilst alive then there would be no IHT .
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- Lemon Quarter
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Re: Discretionary trust
Have you considered the alternative of making a gift but taking a charge (a mortgage) for the full value over the house? It could be interest free, to avoid any taxation issues, and you could release it - or part of it - whenever you liked.
This way you would effectively retain all the value in the house, so that even in the unlikely event of a third party making a claim on it there would be nothing worth having.
This would be much simpler - and therefore much cheaper - than setting up a trust.
This way you would effectively retain all the value in the house, so that even in the unlikely event of a third party making a claim on it there would be nothing worth having.
This would be much simpler - and therefore much cheaper - than setting up a trust.
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- 2 Lemon pips
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Re: Discretionary trust
Thanks, I am open to any ideas , I just wonder , given HMRCs new powers to approach avoidance in a different way, whether they would claim it's still part of our assets for IHT purposes .
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- Lemon Quarter
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Re: Discretionary trust
Holts wrote:I just wonder , given HMRCs new powers to approach avoidance in a different way, whether they would claim it's still part of our assets for IHT purposes .
Yes, they would, in that the value of the `loan' to your children would be classed as an asset.
I hadn't realised from your original question that this was likely to be a concern for you, but as it clearly is the proposed solution may not be suitable.
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- 2 Lemon pips
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Re: Discretionary trust
Clitheroe , thanks for your help , my favourite when little , 2:30 sunday afternoon after the Navy lark .
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