0161 928 7590 [email protected]

Any client who is paying any money toward educational costs (for their child or their spouse’s child) or for care fees (for any relative) could be better off exploring a trust option to make the payment, as once earmarked under a trust they will take the money outside of their own Estate for IHT purposes. The key aspect is to identify the expenditure that is being incurred and then to move the money out of the Estate which is needed to pay these costs. Done properly this money will be excluded from any IHT calculation.

For example let us say a parent is contemplating paying their child’s education costs over the next three years and they need to find £30,000. If they set up a trust earmarked specifically for these educational fees and pay £30,000 into it then any money in this trust will be outside of the IHT net should the parent or parents die. If such a trust is not set up and the parent dies then any money used after death to pay the fees is within the IHT net.

Likewise with care fees, gifts which are excluded are any gifts to “any relative of yours, or your spouse, that is dependent on you for care”. So if a relative needs to receive financial support in respect of their care fees then monies can be transferred to that relative to pay the fees and the value of the gift is excluded. Again this can be done in the form of a lump sum pre-paying future fees, again capital moved out of an Estate which is for gifts which are for the relevant educational or care costs are taken out of the IHT picture.

Learn how to live the best life possible with the money you have.

Take our free 5-minute Return On Life online assessment and see what your ROL is.

Read our free guide to getting every aspect of your financial life under control.

Want to realise your wider life goals and ambitions, without the fear of ever running out of money?

  • This field is for validation purposes and should be left unchanged.

Visit our Information Hub

Information is the key to wise decisions. The Otus Information Hub is packed with articles, videos and case studies to guide you in making smart choices about your financial future.

Get in touch with Otus

If you like what you’ve seen so far, please get in touch to ask any further questions you may have.

6 + 15 =