My Client is going to make ad hoc payments out of surplus income into a Trust for the ultimate benefit of her only Son and/or his issue.
Presumably, members of the forum would recommend a letter/document to demonstrate that the intention is to make this an ongoing process in the future? If so, do any members have a suggested framwork for such a letter?
The donor needs to be able to demonstrate that there is surplus income so an income and expenditure account, along the lines of that contained in the IHT403, would be needed.
The letter needs to stipulate:
· that the donor has checked that there is surplus income;
· that the gift is being made out of that surplus income; and
· that the donor intends to review her income/expenditure position annually and, if there is any surplus income, to make further gifts out of the surpluses in the future.
Coles Miller Solicitors LLP
I recommend clients to keep a record in the format set out in the IHT 403 of the figures on an annual basis. It is much easier for them to do this, than for their executors to have to look back and collate the figures for the last 7 years. I usually suggest that this is done at the same time as they deal with their tax return information. The figures are more likely to be accurate if prepared contemporaneously which may be important if the amount of surplus income is in doubt.