Mr and Mrs Williams were both from humble beginnings. Mr Williams started a business with his father that quickly became very successful. They had two children together and by their own admission their children were spoilt and enjoyed an incredibly high standard of living.
At one point the Williams' wealth was approximately £600m. In the 1970s, Mr and Mrs Williams established trusts for the benefit of their children and future descendants. Many trusts were settled in the sole names of the children. Mr and Mrs Williams also purchased luxurious homes for their children and their trust funds provided them with a multi-millionaire income every year.
In 1992, Mr and Mrs Williams purchased Lyegrove; a Grade II listed manor house, and poured every resource into restoring it. Their view was that this house would be the focal point of the family. The Williams' purchased and funded the restoration of the house, but put it in the names of their children, again with the view to minimising inheritance tax.
It became apparent that the children did not consider the assets that were in their sole names as property of their parents and sought to exclude their parents from utilising those assets. A bitter legal battle ensued which, apart from anything, resulted in a complete breakdown in family relations. As the case settled it is impossible to know what the parties decided, but it is likely that Mr and Mrs Williams had to accept that many of the assets they believed were theirs were now the sole property of their children.
Many people are concerned by inheritance tax being charged on their estate upon death and are motivated by a desire to maximise the amount their children will inherit. Placing assets into trust is an effective way of minimising the size of your estate and, therefore, minimising the inheritance tax liability. However, once you place your assets in trust you lose all control of those assets, they are no longer yours to make decisions about. This approach obviously carries with it significant risks, which Mr and Mrs Williams discovered.
If you would like to consider tax saving mechanisms, please contact a member of our Private Client Team. If you feel you have made a mistake with regard to setting up a trust please contact a member of our Contentious Trust and Probate Team. Law covered as at August 2018.