Fiducia Wealth Management
Posted in Tax Planning, Tax Relief on 02.05.14

Whilst your accumulating pension fund or death in service lump sum may not be taxable on your death, if it is paid directly to your spouse or civil partner, this will inflate the value of their taxable estate, so the benefits will eventually become liable to inheritance tax on the second death. By asking your pension scheme or death in service trustees to make payment to a Bypass Trust rather than to your spouse or civil partner outright, you can be confident that the death benefits will remain accessible to your beneficiaries without forming part of their estates for inheritance tax purposes.

The Bypass Trust is discretionary, and the beneficiaries will include your surviving spouse/civil partner and children. These trusts are always subject to the trustees appointing the benefit to your spouse; your spouse has no right to demand the funds as the trustees have to consider ALL potential beneficiaries.

So during your spouse’s/civil partner’s lifetime he or she can potentially benefit from income and capital distributions (and possibly even from a loan of the Trust property which may be an allowable deduction for inheritance tax on the beneficiary’s death). The assets in the Trust will not, however, form part of your spouse’s/civil partner’s estate and will not therefore be taxed on his or her death. The Trust may simply continue for the benefit of the next generation (it should, of course be stressed that the Trust is flexible so that if your spouse/civil partner has need of all the Trust Fund it can be distributed to him or her provided that the trustees are in agreement).

If you would like to know more about how we as Financial Advisers can help you set, plan and achieve your financial goals then financial planning section of  our website: Financial Planning or send us email at: email@fiduciawealth.co.uk

The information contained in website is for guidance only and does not constitute advice which should be sought before taking any action or inaction. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occasioned in connection with the content hereof and any such action or inaction. Professional financial advice is necessary for every case.

Fiducia are an award winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk

Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.

Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority. FCA No. 408210

Fiducia Wealth Management
Posted in Tax Planning, Tax Relief on 02.05.14