Donating to Children

You may wish to make sure your children or Grandchildren get as much of your Estate as possible. If so, it is worth taking certain factors into consideration. For one, your Estate will be taxed if you own a total in assets exceeding the nil rate band for Inheritance Tax – that means less for your children. Secondly, none of your Estate will pass toy your children in the event that you die leaving a spouse, and your spouse will not be obligated to leave money to children that are your and not theirs – in fact they may not even leave money to the children that you share (though, presumably, you will have discussed options in any case)!

If you want to be certain that something is given to your children follow the advice below

Your Children’s Future

There are a number of ways to donate to children. You may wish to give them something whilst you are alive. You can do this by giving them gifts under the Seven Year Rule, although this does run the risk that those gifts will be taxed should you die within seven years. There are no limits on gifts from parents or Grandparents although in both cases tax may be due back under the Seven Year Rule.

To ensure that money passes to your children after you die you will need to assure that they are written in to your will if you are leaving a spouse or Civil Partner. If you are not leaving a spouse or Civil Partner, it should follow that all your assets go to your children, but it may be best to stipulate what goes to whom to avoid later disputes, and as you may have preferences regarding how your assets are divided for various reasons.

All money that does pass on to your children after you die will be exempt from Inheritance Tax in any case. Please not however, that in taking advantage of the joint married persons nil rate allowance (whereby you can combine both persons nil rate allowance) you will eventually stand to lose money, as on the death of the second partner, everything above £300’000 will be taxable. There is one way around this utilising a Will Trust Loan Plan. For further details see www.ewltd.com .

Do note, that although money left to your children is any case exempt from Inheritance Tax, it is always worthwhile giving as much to them in their lifetime as you can as this will reduce your overall liability by reducing your overall wealth – whilst ensuring that the money does not go too far. Whilst most gifts given to your children will be subject to the Seven Year Rule you are also able to give gifts under any number of allowances operational during any tax year – including up to £2000 as a wedding gift to any of your children, up to £3’000 per tax year and any number of £200 gifts which can be made within a year to different persons.

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