5 things to consider if you’re a silver separator

 05 May 2021
5 things to consider if you’re a silver separator

The surprising news broke this week that Bill and Melinda Gates are to divorce after 27 years of marriage. This has put the media focus back on so-called ‘silver separators’ - couples who divorce later in life. 

So, what might the couple need to consider for their future estate planning, and securing a future for both their children and their charitable causes? 

To be honest, Bill or Melinda Gates won’t be too concerned about funding the remaining 40+ years of their lives, or worry about who gets the pension or the family home. 65-year-old Bill is worth an estimated £89billion. According to news reports, he and 54-year-old Melinda have already come to a financial settlement. 

In a joint Twitter statement, they declared that they would continue to work together on projects at the Bill and Melinda Gates Foundation, In 2019, the Foundation had net assets of $43billion, $36billion of which was put in by the couple between 1994 and 2018.

However, if they were based in the UK, they might need to address ways to ensure that their estates were put to the best use possible by a series of estate planning measures. Here are the top five planning tips we would mention to them!

 

1. Inheritance tax planning

This is the biggest issue for many UK high worth people; how to retain as much of their wealth and not hand it all over to the taxman.

In 2017, the HMRC collected a record-breaking £5.4billion in Inheritance Tax (IHT). According to Which? magazine

“The data shows that most of the inheritance tax payments come from estates worth between £500,000 and £1m."

Assuming that the Gates split their fortune 50/50 (Melinda is a champion for gender equality after all), this would give each of them a minimum worth of £44.5billion each. If they were to die with this amount as the value of their estate, and with the current nil-rate threshold at just £325,000, they would each pay IHT at 40%. That would equate to a tax bill of £17.8billion, more than three times EACH the entire IHT tax bill of the UK in 2017!

 

2. Giving to charity

Of course, Bill and Melinda have not spent a lifetime in business to see the coffers of any tax authority swelled by this kind of sum. The UK tax system recognises this too. 

“There’s normally no Inheritance Tax to pay if … you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club.” 

Bill Gates has often stated that most of his wealth will be left to the Bill and Melinda Gates foundation. He is one of a growing list of billionaires who have committed to giving the majority of their wealth away to charitable organizations, and have signed the Giving Pledge.

 

3. Gifts during your lifetime

In the UK, you can gift monies and assets and a ‘taper relief’ might apply, depending on how many years elapse between your gift and your death. For example, anyone you gift might have to pay Inheritance Tax, but only if “You give away more than £325,000 and die within 7 years”.

 

4. Make a new Will

When you get divorced, you should make a new will. If you name your spouse by name, even if you divorce, they might inherit. Making a new will enables you to secure your estate for your children, grandchildren and those you wish to benefit. Equally, you should make a new will if your remarry, for precisely the same reason, and also because when you marry, any previous will automatically becomes null and void. 

 

5. Trusts for your children

Creating a Trust  helps you ring-fence certain assets for the benefit of your children - and nobody else. As the Money Advice Service explains:

“A trust is a legal arrangement where one or more people or a company (called the trustees) controls money or assets (called the trust property) which they must use for the benefit of one or more people (the beneficiaries).”

Bill and Melinda Gates have already stated that; “Our children won't be left billion-dollar trust funds".

Trusts are quite complicated and you should always seek professional advice before deciding what might be best for you and your family. (If you are considering this, Paul is able to provide regulated financial advice.)

 

Not got billions? How to safeguard your estate, big or small

Whatever the size of your estate, from very modest to absolutely massive, estate planning is key to preserving as much as possible for the next generation/s. Call us to arrange an initial appointment to talk through your situation, and to discuss ways to make your estate a legacy, not a liability.

 

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During our initial discussion Panthera (Paul) fully explained the Will making process. We were made aware that our assets could be exposed to various risks such as Care Costs. Panthera (Paul) advised on how we could protect these assets by setting up Family Trusts. Having decided to go down this route Panthera (Paul) provided all the legal documentation in a timely manner despite having to work within the constraints of Covid-19 restrictions.

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