Navigating Investment Opportunities Across Borders

We’ve managed to cobble together another themed Q&A episode, this week dealing with questions around Inheritance Tax, Trusts and Care planning. Lots for Roger and Pete to get stuck into!

Shownotes: https://meaningfulmoney.tv/QA18 

00:48  Question 1

Hi Pete, Hi Rog, Thanks for your ongoing work on the Podcast, I’ve been listening for many years and have learned a great deal from you both. Keep up the good work!

My question is in relation to trusts. My parents, both aged 70, have recently got round to updating their wills, putting POA in place for finance and health and have been in discussion with a solicitor about putting a trust in place, primarily to safeguard their assets from being used up in the event of them having to go into care in later life.

At present I believe their estate to be approximately £600,000 including their house which I would imagine is worth approximately £250,000. The rest is made up of savings. I don’t believe their estate would be subject to inheritance tax so I don’t believe this is the reason for setting up a trust.

I have listened back to your previous episodes on trusts but I was wondering, firstly whether much has changed since these podcasts in relation to the general setting up and management of a trust?

Secondly I wondered if you could explain the negatives to my parents putting the majority of their assets into trust, namely are there any ongoing fees, can my parents take assets out of the trust should they need to and what are the tax implications for the beneficiaries when my parents pass away? Would any of these things change in the period where only one of them has passed away?

I appreciate this is a huge topic and you may not be able to address all of these queries but it appears they have been advised of the positive parts of this process but I would like to ensure we are aware of the potential pitfalls. Thanks once again! Jon

11:10  Question 2

Hi Pete and Roger,

Still loving the show and I'm enjoying the current variation in format - keep up the fantastic work! My question relates to estate planning:

My wife and I own our home (mortgage free) 50/50 as tenants in common. We have up-to-date wills, LPAs, expressions of wishes and "Dead Files" set up. Each half of the house will be left to our daughter as and when, with the appropriate "right to reside" wording in place for the remaining partner. We are both in our late fifties, so hopefully not needed for many years yet.

The IHT side is fine as it's just numbers - allowances and values etc. What I can't quite get my head around is any potential CGT liability for our daughter following the second death. Not so much for the financial impact, as she is already comfortable in her own right (with my and - via the podcast - your encouragement over the years) and will inherit further monies when we pass, but more from a planning perspective.

I have looked online and disappeared down several rabbit holes, but from what I can gather although she inherits half the house on the first death, essentially because the surviving partner continues to live in it and therefore any actual money can't be realised, CGT is only calculated from the date of the second death (assuming she sells the house at that point).

Is this correct, or will her CGT liability on half of the value start on the first death and be based on (half of) the house valuation at that time, as obtained for that probate? Maybe I'm taking the planning a little too far, but I like to be prepared. These circumstances will be more and more relevant to families over time, I'm sure.

Your usual wisdom and common-sense views would be very much appreciated (even if the answer is "...it depends!"). Thank you again for the information and humour the two of you provide each week - long may you continue!

Best wishes, Glen

16:11  Question 3

Hi guys

Thank you both for a great podcast, big shout-out to Rog because he gets missed off sometimes in these testimonials – genuinely wish I had found this podcast years ago. Have made so many past mistakes but now correcting them one by one!

I have a question about care costs which I hope you could answer.

My mum is suffering from late stage dementia and my dad who is her 24/7 carer is struggling to cope (they are both 80yo). I have PoA for my mum and am trying to involve myself more in her care plan going forwards.

Care (in the home initially) is going to be required and I was wondering how this is paid for. My parents worked hard and have reasonably large savings and investments in both their individual names and in joint names and the extent of these means they would have to pay for care.

What we are not clear on is whether money or investments in my mum’s name would ONLY be used to pay for her care or whether jointly held money or investments would be used or whether anything in my father’s name would also be used to pay for care?

I’ve tried to find the answer to this online but cannot find a clear answer so remain confused! Also are there things that we should be doing to manage this better – end of life planning, trusts etc etc?

My dad worked incredibly hard to provide something to his grandchildren and he is actively putting off getting help and harming himself for fear that he won’t be able to pass something down to his grandchildren – this is incredibly sad and feels cruel.

Any advice that you could give would be much appreciated.

Keep up the great work David R

23:30  Question 4

Hello Pete & Roger,

Firstly I want to say thank you so much for all the work you do to teach all us mere mortals how to navigate the world of personal finance.

I have a question: Everyone talks about merging finances with a partner and then having children.

I am in my mid 40s and my children are early 20s. I have a partner and I hope to move in with him one day (he has no children) I might move in with one of mine.

How do I protect what I currently have and ensure that goes to my boys? He has considerably more than I do and I don’t expect him to support or pass anything on to my boys.

I understand I don’t want to do a mirror will but would I do a “prenup”? We aren’t getting married. Is there a cut off point “moving in day” where everything after that is split 50/50 with the new partners? Or am I over thinking this? I have been through one divorce and don’t want to again but I do want to protect what is mine for the sake of my boys.

Any advice would be very welcome.

Thank you and keep up the AMAZING work.

Kind regards, Carla.

28:56  Question 5

Hi Pete, Roger, Nick, Ruth and everyone else in your fantastic team.

I have a few questions around a niche scenario that I can't find answers to online. I'm hoping you can point me in the right direction.

My parents-in-law were convinced to transfer their home into an asset protection trust in the past before I met them (more than 10 years ago, as I think that's relevant). They were told it would help avoid having to pay care costs. They now know this was never going to be suitable for them, and are looking to mitigate the damage. I suspect the names McLures Solicitors, Jones Whyte, Andrey Robertson and Cynthia Duff might be depressingly familiar to you.

The ownership of the house was changed to tenants in common, and each of them transferred their half of the house to a separate trust. So there was the Mr M trust and the Mrs M trust.

The trusts were set up such that Mr M and 2 financial advisers were the trustees of the Mr M trust; Mrs M and the 2 financial advisers were the trustees of the Mrs M trust. The trust deed gave the settlors the right to add or remove trustees during their lives.

When I started to look at this, I felt there were 3 stages to resolve this:

1. Change the trustees to a more sensible arrangement. 2. Update the land registry with the correct trustees. 3. Decide whether to end the trusts.

I knew the first 2 steps were going to need a solicitor, who my parents-in-law found. However, the first 2 stages have now been resolved.

So, they're now looking at the final stage - deciding whether to end the trusts. It's clear their current solicitor isn't going to be right for them for this part.

I think the disadvantages to leaving the trusts in place are:

- If either of them need care in the future, I don't think the trusts will make any difference in the local authority's means assessment. - The property is likely unmortgageable if they should need any kind of equity release in the future, for example to pay for care. - Neither trust has been registered with HMRC due to the original solicitors ceasing trading. There might therefore be a tax charge/penalty charge, and an obligation to file periodic tax returns for the trusts.

Their preference is to wind up the trusts, but are there any pros to leaving them in place? And are there any cons I haven't thought of already?

Knowing that "should" is a dirty word in financial advice, I'm trying to find out whether ending the trusts might have any drawbacks or tax liability.

My understanding is that they each transferred their share of the property to the trust when the house was valued at £X. If the trusts are ended, they'll receive the property back at a value of £Y.

My questions are:

- Is there any tax liability, based on the difference in property value between £X and £Y? - Could they be entitled to any tax reliefs based on their circumstances? - Are there any other drawbacks you can think of that we might not have considered?

I know you can only give general information and guidance, but I couldn't work out an answer to this myself. I couldn't even work out which type of professional they should speak to - a solicitor, accountant or financial adviser. I'd be really grateful if you could point us in the direction to get some personalised help.

Many thanks, Mathew

33:55  Question 6

Hi Pete, Roger,

As a long-time listener and viewer of your channel, I appreciate your insights on keeping costs low, investing in global funds, ensuring tax efficiency, and the benefits of long-term investing.

My wife and I have recently become a grand-aunt and grand-uncle. Rather than giving the usual presents, we’d like to do something more practical by investing regularly (£100/month) for our grandniece—after all, there’s no better time to start long-term investing than from birth. Likewise, we’re comfortable investing 100% in equities, given the long time horizon.

On the surface, I suspect you’d recommend a Junior SIPP or a Junior ISA. However, the challenge is that she (and her parents) are French citizens, living in France and paying taxes there. While I appreciate that you focus on UK matters, are you able to provide any pointers on how we could invest in a low-cost global fund for her under these circumstances?

Many thanks for your time and any guidance you can offer. John