Solicitor William has accumulated a lot of wealth and is worth over £4 million. He also has two sons – both in their early 30s. He wanted to see how he could best ensure his sons and any future grandchildren could one day benefit from his hard-earned money in the most efficient way.

Over the years, William had helped his sons financially from time to time and wanted to continue doing so. But he didn’t feel they were ready to receive any large lump sums from him as they were still building their own careers and lives. He was also keen to plan appropriately around any changes from the government’s 2024 Autumn Budget.

After discussing all his options, we helped William set up a trust for his sons. This was for the maximum amount he knew he could live without – £300,000 – as it would effectively be locked away.

The aim is for this money to be outside William’s estate after seven years, potentially saving him from paying inheritance tax on it.

Every penny would instead go straight to his family, as he wished. All with one condition – that he didn’t pass away in those seven years. Also, the money within the trust is invested and therefore has potential to grow, which could further benefit his family.

This all remained unchanged following the government’s Budget, in which the amount you could pass on without paying inheritance tax – or the ‘nil-band rate’ – was frozen at £325,000 for a further two years.

The government also announced it was looking to change the status of pensions so they formed part of people’s estates.

This means that, whereas you could currently pass on your pension inheritance tax free when you die, from 2027 that may no longer be the case in some circumstances. This is subject to consultation, but was another factor in William’s decision to use a trust to help pass on his wealth tax-efficiently.

Premier Financial Planner Anna King says, “One thing William really liked was that it was completely within his control who benefitted from the trust. He was mindful that, when the time came to take the money, his kids might not need it, but there could be grandchildren he would want to support. He liked that he could control who received what, and when.”

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The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment. You should continue to hold cash for your short-term needs.

Tax reliefs referred to are those applying under current legislation which may change. The availability and value of any tax reliefs will depend on your individual circumstances.

This case study should not be taken as advice.