How much to give away

Factors to be taken into account:

• Ill health
• Separation or divorce
• Retirement
• Death of one of the parties to the marriage
• Effects of inflation on the purchasing power of income and on the value of retained capital

What to Give Away

Assets likely to appreciate in value should be considered for lifetime giving.

Gifts of assets before the increase in value ensures the growth occurs in the estate and freezes the value of the gift at the value at the time of the gift which will be relevant should death occur within 7 years.

How to give away

Outright gifts are straight forward but are inflexible. If circumstances change the gift once made cannot be recovered. If the proposed person receiving a gift is a child, a substantial gift would not be sensible.

An outright gift may become inappropriate. For instance a person may become addicted to drugs and so be better able to fund the addiction or may become mentally or physically handicapped when the money might be better spent for him or her rather than given to him or her.

Gifts into trust provide flexibility

Gifts into trust provide flexibility Unexpected events do occur and flexibility is an important part of planning. However trusts require proper administration.

Dealing with income and investment of trust funds, preparing trust accounts and making tax returns for the trust all cost time and money. This must be weighed against the advantage of flexibility. So too must possible adverse changes in tax law affecting trusts.