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Beating the death clock

Like many of my successful friends and acquaintances, I have been giving much thought to what will happen when I, as is inevitable, fall off the perch. I suppose that starts being a concern for most people who have a decent wedge of assets once they pass the age of 45 – or who have had any sort of health scare to concentrate their minds.

I have five kids (from two wives) and I definitely don’t want to demotivate them. I think their lives could be ruined if they think that all they need do is sit around and wait to inherit. I’ve seen too many “trustafarians” do just that and end up wasting their lives. So I’ve always kept my older kids on a fairly tight rein, helping them out when absolutely necessary but telling them that they have to earn their own money and budget accordingly. Why not? I made my own money and that “journey” has been a fulfilling and rewarding one.

I keep telling my kids not to expect any money when I’m gone because I’m either going to spend it or give it away to charity. I will give them the best education possible, help them buy their first house and then they’re on their own. In fact I do intend leaving them something but I have decided not to tell them so that they expect the worst and take whatever comes.

Thought. If you don’t need the money and don’t want to leave it all to your children, what do you do with the rest? I already give reasonable sums to charity. I could of course dispose of the rest by leaving charitable bequests in my will but I’d rather see play a more active role so that I know the money is being used well and I can actually see the results.

I’ve therefore decided to set up my own charity. I can inject a large sum and that takes it out of my estate for inheritance tax purposes. It also means that whatever additional money accrues from the assets will belong to the charity rather than me, and that means it won’t be taxed. This way I can retain control of the money – by owning and controlling the charity – and ensure that it only benefits my chosen projects and causes.

I’ve discovered that it’s surprisingly simple to set up a charity. I can either set up a trust or incorporate a company limited by guarantee. They will then produce a business plan and write to the Charities Commission to request official recognition as a charity, which gives the structure tax free status. This also means that anyone donating money gets a tax deduction – including me. I will own the voting memberships in the charity so I will be able to appoint directors of my choice (which will probably include me) and manage and control it, but the capital and income can only be distributed to charitable causes or to further the charitable aims of the structure.

This seems to me by far the best solution. An added bonus is that the charity can also employ people so if my children show an interest – or I think they could learn something by being involved – they can be employed on a market salary to help out and do good work. I don’t see them doing this on a permanent basis – they’re all too ambitious for that – but it would be good experience and it would also be a great opportunity for them to work with their old man and find out what makes him tick. Now that would be a legacy!

Rather than prevaricate any longer, I’m going to get on with setting up my charity next week. After all, you never know what is going to happen or how long you’ve got – although somebody did suggest that I consult www.deathclock.com, which tells you exactly when you are going to shuffle off this mortal coil. I hope it is accurate because it gave me another 45 years, 2 months and 10 days – which means that even my youngest child will be older than I am now. And that’s a long time to wait for a surprise.


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