These are some examples of clients we have helped and who's affairs we are currently managing, We have changed names and some facts to protect client confidentiality.
Trusts
A long standing client asked us to look at his children's discretionary trust. The trust had been set up by his parents and was run by a London solicitor who had asked a stockbroker to provide investment advice many years previously.
The fund was worth around £450,000 and was set up in 5 different trusts. There was no investment diversity at all with around 30% of the trust fund being in cash and 70% UK equities.
We began by getting the client and their advisers to consider what the trusts purposes were. From this we agreed that the objective should be to provide a home for the children (or at least sizeable deposits). With this in mind we split the various trusts between the children and managed them to a proposed maturity date at which time he trust would be in cash ready for property purchase.
We introduced Bond wrappers to the trusts to save on 40% tax and as luck would have it for the two eldest children our plan had them in cash during the 2008 crash so they were able to buy a property using their inheritance according to our "master plan".
Trusts are incredibly useful structures however they are highly tax inefficient if you do not use the right wrappers and you to not plan the trust around objectives including where appropriate emphasising income generating funds where the income can be passing to basic rate tax payers and using bond wrappers where they can defer or avoid tax.
- Independent Financial Advisor
- Chartered Financial Planners
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