Leaving Gifts to your Grandchildren

When the so-called King of Soho Paul Raymond died in 2008, he left the bulk of his huge property empire to his grand-daughters, Fawn and India.
It’s unlikely that many of us will have the vast fortune that the one-time richest man in the UK had to leave to our grandchildren, but there are a couple of key points to bear in mind if want to gift an inheritance to your grandchildren.

One good idea is to leave money for your grandchildren in trusts. This means that should you die when those grandchildren are still fairly young, then the money can be held in trust for them until they develop financial maturity and responsibility. You could consider setting up a trust for them where the money is doled out every few years too, so that they do not receive huge sums of money (and temptation) in one go.

If you want to avoid inheritance tax (and this might change, depending on which government comes into power post May 7 2015), then you can start giving your grandchildren sums of money while you are still alive.

You can give gifts of up £3,000 to each grandchild in each tax year (and the sum can be carried forward, although £6,000 is the maximum annual exemption amount. Wedding gifts of up to £2,500 are also allowed, so long as they are gifted as close to the wedding as possible.

For more information on inheritance tax and what is permitted, see the government website.
Bear in mind, if you give a gift the rules are that you are supposed to live for seven years afterwards. While most of us are fortunate enough not to know in advance the date of our death, it is worth bearing in mind…