Enable’s IFA’s encourage and support saving and investment but part of the picture is also divestment. It is the opposite of an investment, and it is the process of selling an asset for financial, social or political goals. There is also gifting as a way of divesting but there are a host of rules and legal implications of gifting assets and transferring property.
There are several ways of reducing assets that could include come of the following: gifting money or expensive items, such as a piece of jewellery to family members or close friends, putting money into a trust or tying it up in some other way, spending on holidays, gifting property by transferring it into someone else’s name, selling an asset.
But there are implications to incorrectly ‘gifting assets’ in these ways, for both the person giving away the assets and the person receiving them. For many people, their home is likely to be their most valuable asset. There are, however, strict rules that local authorities will pay close attention to when carrying out a financial assessment, so you may find it useful to get extra advice about this.
The key thing to remember here is that gifts that benefit you can’t be given away i.e. you can’t gift someone something that you will still maintain a benefit from in your lifetime and benefit from the gifting rules. For example, if you give away your home but continue to live in it rent-free until your death, you’ll be deemed to be the beneficial owner, and it will still be taxed as part of your estate when you pass away.
If you wish to leave money to other family members, such as your children, it’s a good idea to plan how you want to do this. Some gifts are best to give while you’re still alive rather than leave in your will. Most gifts to people made more than seven years before your death are tax-free Enable’s IFAs can try and help you include this in your financial planning.