Q and A Tax: By Campbell Edgar, Consultant Director of Andersen Charnley

Discretionary trusts prove a very economic way to ‘skip’ a generation

Jim and Susie had suggested that I speak to her father as he was now in his seventies, financially independent and had more assets than he needed (in their opinion).

I explained that any planning I did for him and his wife would be entirely independent of any advice I had given to Jim and Susie.

It is a complicated situation but is likely to end up with the family wealth taking less of a tax hammering than would have been the case had Susie’s dad done nothing.

After getting the initial steps into place, he had subsequently asked me to explain to Susie and Jim what the recommendation had been so that there were or would be no surprises and that any issues arising could be sorted out early.

‘You know Richard (Susie’s dad) has that buy-to-let he bought for a song (£150,000) some eight years ago?’
‘Oh yes – he’s not going to sell it and give the money to me?’ inquired Susie hopefully.

‘Not exactly. Having taken account of all the factors, including his own financial position and the disposition of his capital, he wants to make provision for his two grandchildren.’

‘Oh!’

‘Don’t sound so disappointed,’ said Jim. ‘I am sure that he has your interest at heart.’

I confirmed that this was indeed the case.