Mark Politz, Partner and chartered tax adviser in the private client team at Thomson Snell & Passmore considers some of the issues that arise when gifting money between friends and family.
When making lifetime gifts, Mark says "The person making the gift (the donor) should carefully consider what effect it could have on his future standard of living. Could the gift leave the donor short of money if his financial circumstances change."
"The donor should also bear in mind that the friendship may not last or that the recipient may die prematurely or have financial or marital difficulties. The gifted assets could then end up in the hands of someone else. To avoid this, the donor could set up a trust to protect the relevant assets. The recipient would benefit initially, but the trust fund would ultimately pass to the donor’s chosen beneficiaries."
The full article is available online, first published by Wealth Briefing on 10 August 2016: Celebrate Gifts But Don’t Get Hit By Taxman (Please be aware, you must subscribe to Wealth Briefing to read the full article.)