trusts

[paul101]

a friend a 79 year old widow - has total worth of about £350,000 consisting of a house worht £150,000 and the remainder in savings. She has been advised that the best way to avoid inheritance tax is to set up a tust with her son ( whpo she trusts totally) as thre trustee - she has been told she can then take about £5000 a year as income from the trust but that this is a legal mechanism to avoid tax - does this sound right? all sounds a bit too easy to me!

[Lee Young]

Sounds like a discounted gift trust which are perfectly sound IHT planning vehicles - she does of course need to understand the implications of the investments she is making, the gift she is making and the "income" stream she would be purchasing as all part of the structure.

[bob.fraser@towrylaw.]

She needs to understand that she will lose all access to the gift, other than the income.
She should pay particular attention to what the advisor is being paid for this, since commissions can be high for these types of products. She may want to ask the advisor to charge a fee instead.