Options to pass properties to daughter

[denaro]

Hi all, I have 6 properties, all paid up and some savings.
I’m not sure of the best tax planning route to go down to leave my daughter the maximum amount without incurring silly IHT amounts. A trust will and a bare trust have been quoted to me.
I don’t really trust advisors too much until I have some idea of what I need. Any advice?


If there’s a thread open that relates to this please let me know

[AGoodman]

"I don’t really trust advisors too much until I have some idea of what I need"

I think you meant you don't want to pay advisers until you have some idea what you need.

It's impossible to give useful advice without your full circumstances or writing ten pages on all the options. You haven't mentioned the age of your daughter, your marriage status, value of the properties, income yield or current gain.

Your options are (in increasing complexity and cost):

1. outright gift
2. bare trust
3. discretionary trust (you can holdover gains but transfers over £325k pp will be subject to immediate IHT)
4. family investment company
5. family limited partnership - probably more costly as has financial regulation implications

All options other than 3 will incur CGT on the current gain on the property(ies) you give away. Option 3 depends entirely on the value.

[denaro]

Thank you Mr Goodman

You’re right! I don’t mind paying as long as I feel I’m getting value which is im getting what i need.

My daughter is 18, and I am 48. She’s not married, and the net worth of my property or folio is circa 1 million pounds.
I’m not sure if by income yield you mean how much are the properties netting every year, or what is the increasing gain of the properties since I purchased them.

The income yield is circa 5%, and again is circa 500 K.

Option one is that over time I move all assets to my daughter unless I sell some and use the cash in my lifetime, and option to end the most is the i either by one property and gift to her (leaving the option for 325K as well) or I can transfer one property over to her so she can use the money for herself.

Thanks

[denaro]

Previous post had predictive texting switched on
Thank you Mr Goodman.

You’re right! I don’t mind paying as long as I feel I’m getting value.
My daughter is 18, and I am 48. She’s not married, and the net worth of my properties or portfolio is circa 1 million pounds.
I’m not sure if by income yield you mean how much are the properties netting every year, or what is the increasing gain of the properties since I purchased them.

The income yield is circa 5%, and again is circa 500 K.

Option 1 is that over time I move all assets to my daughter, unless I sell some and use the cash in my lifetime, and
Option 2 buy 1 property outright and gift to her (leaving the option for 325K as well) or I can transfer one property over to her so she can use the money for herself.
Thanks

[AnthonyR]

There's a number of issues to consider:

1. If you gift properties to your daughter you will trigger CGT which will be payable immediately. On Mr Goodman's list of options this would include options 1 and 2. Can your daughter be trusted with the value of the properties and the risk of her making bad financial decisions (or marrying the wrong person).
2. Family trusts can be effective ways of removing assets from your estate without triggering CGT, but have running costs and other issues.
3. Do you actually have an IHT issue? If you are married and have assets of ~£1m you may not have any IHT problems anyway.
4. Can you afford to give away income - if you make a gift to your daughter or into trust you can no longer have the income (if you want it to work for IHT purposes).
5. If you have free cash you can give this without triggering CGT complications and if you want to maintain some level of control this could be structured through a company or partnership (again as mentioned by Goodman).

In any case, I'd suggest that you have someone review your circumstances to determine what's appropriate for you. Many tax advisors will give review your circumstances for a minimal cost and give you some guidance on what you can or should do. While posters on here will point you in certain directions they probably won't give you specific advice as to what's appropriate for you.

[denaro]

Thank you Anthony R. very helpful

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