Giving money to grandchildren - almost

It's really quite a small amount overall, and the administration that would be involved in looking after the money and its eventual distribution vastly exceeds the benefit. In my view, they should be persuaded out of it to avoid the creation of an unnecessary and complicated burden.

Good sensible advice. However, the alternative that they have in mind is to give *me* the money each year with the wish that I simply hand out the dosh as and when any sprogs arrive, etc.

Which I will do - although it possibly isn't the most tax-efficient way of doing it. I can add something in my own will so that whatever is in the fund if I prematurely pop my own clogs is immediately split between their children. Not that I am planning any sudden trips in a kayak in the North Sea.

The fund being simply some form of savings account in my name only used for that purpose.

I was trying to find the best way of doing this. It is possible that one or both of them could end up in a nursing home.. At which point, IIUC, "it gets complicated" if they have been handing out gifts of 5k a year to a family friend in the preceeding years. IIUC, it can also get complicated wrt death duties, if they both having made such gifts in the immediate past years.

The most tax efficient and hassle free way of giving money if they are below the inheritance tax threshhold is to leave it to you in their Wills. If they do that, the money is yours to do with as you please, and you can give out whatever gifts to the grandchildren/great grandchildren that you deem appropriate, in accordance with their wishes or not. Even if you intend to follow their wishes to the letter, this has the advantage that you don't need to maintain any separate account, and there is no legal comeback if you fail to make any specific payment.

So, persuade them to do that rather than set up what is in effect a trust that someone has to administer and think about perhaps for years on end after they've gone.

My thoughts too but they also want me to be an executor of their wills..

If they do that, the money is yours to do with as you please,

I don't think that they intend to put any legal constraints on the 5k each year that they are planning to give me, should I not come up with an alternative way of doing what they want. They are more than happy to simply trust me.

It isn't going to be that many years, certainly

Sorry, I overlooked the fact that they want to give £5K every year rather than just a single lump sum of that amount when they die. However, you can certainly be a beneficiary as well as an executor of a Will (in fact most executors are beneficiaries too), so that is not a problem. What you can't be is a witness if you are a beneficiary.

Each one can, I think, give a single gift of up to £3000 in any one financial year to whoever they choose, with no tax to pay. In addition to that, they can each give any number of gifts up to, I think, £250 a year, to any number of different people with no tax to pay. Therefore, what they want could quite possibly be achieved perfectly above board by combining their allowances. But what you need is proper financial advice, which I'm not qualified to give. In the meantime, you could of course google for the tax treatment of gifts on the Inland Revenue site.

In message , Norman Wells writes

This may help with clarifying that as it is spelt out quite clearly and remember that you can carry forward the annual exemption one year so that first time round they could give double to get things started

In addition, you can give unlimited gifts out of income, as long as your standard of living is not affected by the gifts.

One solution might be for them to establish designated accounts with one or more Investment Trusts, and make regular monthly subscriptions to such accounts. What this would be is a bare trust form an as-yet-unborn child.

Hi Sue

Here's an answer I gave to a similar question with some helpful links (probably more in the rest of the thread) -

I'd write a specification and get a quote for initial & reoccuring fees from a STEP solicitor.

says that a beneficiary must be named so that appears to rule out running it for unborn children.

These may be worth a look -

John Boyle is the expert on these matters so it will be interesting to see if he pops up.

btw biological grandchildren only ? Perhaps another thing for them to think about. It's got to be done properly otherwise it'll be an endless source of argument/bad feeling !

hth

Daytona

Thanks Daytona, Terry,, Paul and Norman.

they can also avoid (inheritence) tax by making "regular gifts out of income". For example, if they want to give 5000 per year year then they should set it up as a monthly standing order of 5000/12 pounds so that it becomes a clear pattern of the regular expenditure. there is no limit to the amount of this type of (IHT exempt) gift but the executors will need to be able to demonstrate that it was being paid from income, not, for example, by selling capital bit by bit.

Robert