In his Budget 2021 speech last month, chancellor Rishi Sunak announced freezes on inheritance tax and capital gains tax allowances until 2026.
With the pandemic and Brexit already having a compound and often disproportionate impact on many rural, farming and landowning families and their businesses, these tax freezes have avoided a “triple whammy” and come as welcome news for families with wealth succession plans – particularly farming families, for whom gifting or inheriting the family farm is commonplace.
Intergenerational wealth management and tax planning
I am speaking with a number of parents in the region who are currently focusing on intergenerational wealth management and tax planning for the safe succession of family wealth or assets to the next generation. The potential impact of a future divorce within the family is a key area of concern.
There are a number of pro-active steps that can be taken with the assistance of family lawyers to help preserve wealth intended for the immediate family, including setting up a pre-nuptial agreement (signed before a couple’s marriage) or post-nuptial agreement (signed after the marriage). This is a formal contract which sets out how a married couple’s finances will be organised and addresses what will happen to their assets in the unfortunate event of marriage breakdown.
Nuptial agreements – now decisive and upheld by courts
Contrary to popular belief, nuptial agreements are worth the paper they are written on. Whilst not legally binding in England and Wales, in practice they are often decisive and will be upheld by the family courts – so long as there is disclosure of the parties’ financial circumstances and the outcome of the agreement will not leave one party in real financial need.
Both parties are advised to take independent legal advice before any agreement is signed, to ensure it is fair and freely entered into with a full appreciation of the implications. With many couples postponing their weddings due to the lockdown, now is a pertinent time for reviewing financial affairs.
The Silk Family Law team specialises in drafting pre nuptial agreements and post nuptial agreements, from the most straightforward of documents to complex agreements involving trusts and business assets for farming and landowning families. We work alongside a trusted network of wealth managers, accountants, and other financial advisors to ensure all your family interests are protected.
Silk Family Law associate Matthew Miles specialises in all aspects of family law including complex financial issues arising from divorce. Contact Matthew on 07593 583785 or firstname.lastname@example.org.
This article was first published in the Yorkshire Post Country Week supplement 27.03.21.
Main header image courtesy of Edward Cisneros on Unsplash.