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Optimising the proceeds of a pension fund for the benefit of grandchildren.
Our client has a substantial pension fund of about £1.5m in flexible drawdown. He has taken the tax-free cash and he is alert to the tax charge approaching when he turns 75. He also has fixed protection 2014. The client is of the opinion that he does not need any income from the fund nor has he taken any so far.
The client would like to leave the fund for the benefit of his several grandchildren who are now aged between four and eight. The idea is that they would be able to draw sums for secondary school fees and university costs and pay income tax at their own (low) rates when they did so.
Because his children are also well-funded in pension terms they have decided that they do not need any proceeds from the fund. Further a few years’ capital growth after the 75 hurdle could...
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