The 7th Duke of Westminster

[Santo 10]

They are reporting the son is to inherit his estate worth X billion. Children pay inheritance tax on estates over £325,000 or they have to go through probate which would take months or even years.

 

Yes, I know what the threshold is. I would be very surprised if the estate is not held in trusts to avoid IHT. All perfectly legal.

 

---------- Post added 10-08-2016 at 16:22 ----------

 

I'm fairly certain that someone with an estate of that size will have taken steps to protect as much as they can from Mr Taxman.. I know I would..

 

There is this anxiety that only the rich avoid taxes. How many people of average means sign over their house to their children in old age to avoid having to sell it just to pay care home bills? How many taxi drivers have taken you to the airport off the meter? How often does a builder quote you a price and then undercut it 'for cash?' How many times have you eaten in a cafe and been told, 'the til is broken, I can't take your card, cash only today, sorry?' Those are examples not of avoidance but evasion.

Edited August 10, 2016 by Santo

[pattricia 583]

Yes it was discussed on The Jeremy Vine radio show. The question asked was " Should anyone be THAT rich ? My answer is "Why not ??????? What has it got to do with other people ?

[Santo 10]

Yes it was discussed on The Jeremy Vine radio show. The question asked was " Should anyone be THAT rich ? My answer is "Why not ??????? What has it got to do with other people ?

 

It was an infuriatingly Commie discussion. The guy that reasoned Adele was ok with £85m because she earned it was particularly dense. Her heirs will get her money eventually; they won't have earned it, much like the duke's son hasn't. Plus, because the wealth of the duke was all tied up in land I bet Adele is cash richer than he was!

 

Peter Jones once said on Dragon's Den (a few series back) that he had £10m in the bank. He's worth £435m.

Edited August 10, 2016 by Santo

[999tigger 10]

The property will ofc be tied up in lots of trusts to make it as tax efficient as possible. I doubt they will be paying billions. Once youv get money like that it becomes easy to keep it.

 

he can ofc realise some of those assets, but the income must be eye popping, so no need.

[tinfoilhat 11]

It was an infuriatingly Commie discussion. The guy that reasoned Adele was ok with £85m because she earned it was particularly dense. Her heirs will get her money eventually; they won't have earned it, much like the duke's son hasn't. Plus, because the wealth of the duke was all tied up in land I bet Adele is cash richer than he was!

 

Peter Jones once said on Dragon's Den (a few series back) that he had £10m in the bank. He's worth £435m.

 

It was Jeremy Vine though, what were you expecting, well researched topics from the host and expert callers?

[ANGELFIRE1 10]

I believe if the Duke's property and chattels are signed over to his offspring 7 years before his death, no duty is payable. Or is that just a myth.

 

Angel1.

[Funky_Gibbon 42]

What's the point of avoiding inheritance tax on £9billion? At the end of the day you still have more money than you will ever be able to spend in your lifetime.

[Santo 10]

What's the point of avoiding inheritance tax on £9billion? At the end of the day you still have more money than you will ever be able to spend in your lifetime.

 

As stated: he doesn't have £9bn in the bank. That is the value of the estate - mostly land. To meet the 40% IHT bill Hugh would have the liquidate those assets.

 

To be honest, it's probably easier to put the estate in a trust fund for his son to inherit tax free than for his son to liquidate the estate when his dad rolls a 7.

[pattricia 583]

If anyone complains this amount of money is too much , offer the complainer the same amount and see if THEY turn it down !!!

[Nagel 10]

It's explained in today's Daily Telegraph. The Duke of Devonshire also uses trusts to avoid death duties, so Chatsworth doesn't legally belong to him, but belongs to a 'charitable trust'.

 

"Clever use of trust structures enable the Grosvenor family - whose head is the Duke of Westminster - to pass assets down the generations without attracting inheritance tax, accountants say.

 

The Grosvenors' property fortune is estimated at £9bn. Yet the death of Gerald Cavendish Grosvenor, the sixth Duke of Westminster, and the inheritance of his title by his son Hugh, is not expected to trigger vast death duties.

 

This is because successive generations are "trustees" rather than direct owners of the assets, which include swathes of London's most prestigious streets and squares.

 

"The trustees are legal owners but not 'beneficial owners'," explained Hugi Clarke of estate planning firm Foresight. "As legal owners the trustees can do anything an ordinary owner can do, in terms of selling and trading the assets within the trust.

 

"But they do not have 'beneficial access' or absolute rights as individuals to the assets," Mr Clark said. In essence that means they can't claim the assets for themselves or sell them and keep the proceeds.

 

The assets are therefore not inside their individual estates for inheritance tax purposes.

 

According to the Grosvenor Estate's own description of its structure, the six trustees (of whom the late Duke was chairman) "hold the assets of the group for the benefit of current and future members of the Grosvenor family".

 

Income and other benefits can be paid out to beneficiaries, who may or may not include the trustees, and who will be taxed on them as normal.

 

Peter Legg, a chartered tax adviser and founder of IHT Planning Matters, said: "Here it would appear that shares in the businesses are owned by family members as trustees, not as individuals." This puts the assets at arms' length and effectively eludes death duties.

 

Mr Clark said: "The Duke and other family members are likely to be part of a 'beneficiary class'. That means they could receive income from the assets.

 

"But they do not have entitlements to either the income or the assets themselves."

 

Mr Clark speculated that, depending on how the trust was established, all six trustees might need to agree significant transactions.

 

If the Grosvenor family can use this strategy to avoid death duty, can anybody?

 

In theory, yes - though costs could be prohibitive.

 

"You need to have a seriously large estate to make such a structure feasible," said Mr Legg. "The costs of setting up a trust and the ongoing reporting costs can be onerous."

 

More significant though are recent tax changes, which have made these types of trust less attractive to those who want to establish them afresh.

 

For the past decade people who put assets into a "discretionary trust" - the form of trust most likely to be used here - must pay a tax of 20pc of the value of the assets going in.

 

Thereafter they must pay a "periodic charge" every 10 years, which is calculated as a fraction of the value of the trust at that point. This varies according to a formula, but typically falls between 2pc and 6pc.

 

What about the Duke's other assets - surely there will be inheritance tax there?

 

As with all families there are strategies that can be used to cut the bill. And the super-rich can buy the best advice on earth.

 

But death duties on directly owned assets (including properties, artworks and other investments) cannot be entirely avoided.

 

Above the "nil-rate band" - what every individual can leave free of death duties - the value of an estate is taxed at 40%.

 

The nil-rate band is currently £325,000 per person, or £650,000 per couple. (It is being extended in a controversial new change to include a "family home allowance" of £175,000 per person.)

 

These thresholds are of negligible use where estates are measured in tens or hundreds of millions of pounds.

 

The Duke of Westminster is survived by his 57-year-old wife, Natalia. As with all married couples the surviving spouse can inherit assets free of inheritance tax without limit.

 

But if, as reported, the bulk of the Westminster estate goes to the late Duke's only son, Hugh, who is in his 20s, tax will be due on the late Duke's directly owned assets above the threshold.

 

What about giving assets away?

 

Yes, you can give anything to anyone and provided you survive seven years, the gift is free of tax.

 

The problem here is that older generations tend not to want to lose control of their wealth until the next generation is "ready".

 

Discretionary trusts can be used where parents or grandparents want to maintain control over assets while getting them outside their estate for inheritance tax purposes.

 

Beneficiaries and terms can be changed by the trustees.

 

The "settlors" (people giving the assets to the trust) need to survive seven years for those assets to move entirely out of their taxable estate.

 

"The point is that these trusts can ringfence assets from the great modern dangers of divorce or unsuitable marriages or profligacy," said Mr Legg.

 

"Absolute" or "bare" trusts are different in that no tax is payable when the assets go in. But they're not flexible. The beneficiary cannot be altered."

 

http://www.telegraph.co.uk/tax/inheritance/inheritance-tax-and-how-the-dukes-of-westminster-avoid-it-on-the/

Edited August 10, 2016 by Nagel

[pacifica 10]

I believe if the Duke's property and chattels are signed over to his offspring 7 years before his death, no duty is payable. Or is that just a myth.

 

Angel1.

 

If the property had been gifted to his son the estate would not be worth £8.3 billion, and there would be no story.

[taxman 12]

Yes it was discussed on The Jeremy Vine radio show. The question asked was " Should anyone be THAT rich ? My answer is "Why not ??????? What has it got to do with other people ?

 

Well what did he do to earn it?

 

Why should millions of people scrimp and save for the basics when someone else can be third richest in the country just because of birthright?

 

No-one gives a toss about Richard Branson, Bill Gates, etc being rich when they've seriously done things to get where they are, but the 7th Duke has had the biggest silver spoon in history. He studied "land management" at Newcastle University (a euphemism for shooting raptors so that people can enjoy blasting grouse) and currently has a minor accounting job.

 

He won the Euro-Millions Rollover and the National Lottery combined, without ever having to buy a ticket.

 

But hey, if you're happy that the local library can't afford to remain open, or that the crossing patrol is removed because of lack of money then great.

 

---------- Post added 10-08-2016 at 19:57 ----------

 

If anyone complains this amount of money is too much , offer the complainer the same amount and see if THEY turn it down !!!

 

It's not a question of whether he should turn it down, but how did he get to own it all in the first place. Hard work? Hereditry? Gift from the Crown? Marriage? Why should an individual own vast tracts of our country just because of birthright or just because 900 years ago a king gave land that he'd conquered to some of his barons in exchange for military support.

 

It's a bizarre way for individuals to own vast tracts of OUR country.