I may be just having a Friday moment but what are the tax implications of leaving a legacy to a grandchildren with an age contingency of 30. There are four grandchildren at present and a period of 23 - 30 years to pass before they attain this age. Clients are aged 59 and 60 at present so there is a chance the grandchildren will not reach this age contingency before their grandparents die. The overall estate is in excess of £2M. Any other general thoughts re this and the implications of leaving such a gift would be appreciated. I was going to suggest that rather than leaving four separate gifts, they put say £200,000 into a discretionary trust instead to provide more flexibility but my understanding is that tax implications would be the same.
As you say, the IHT implications would be the same as for a discretionary trust in that it would be a relevant property trust from the date of death (as opposed to an 18-25 trust which would only be relevant property from the date the beneficiary reaches 18).
Alternatively, the grandchildren could be given an immediate life interest. The Trusts ould then be IPDIs.
Simon Northcott
How would that benefit the grandchildren as the idea is that they do not benefit until they are 30. If it was an IPDI, wouldn’t they be entitled to the income immediately regardless of their age and not entitled to the capital unless the trustees are given power to advance it?
Thanks
There would be no 10 IHT charges on the payment if capital and income would not be subject to the trust rate of tax.
Simon Northcott