My wife and I would like to give money to our two grandchildren (aged seven and ten) to purchase our son's flat; he has purchased another property. There will be no mortgage and the children's parents will be the legal owners and trustees until they both reach 18 and the ownership will be then become 50:50. If this is feasible, will no inheritance tax (IHT) be payable by my wife and I, assuming we live for seven years? Do we also need to create a bare trust and inform HMRC?

Arthur Weller replies:
You are correct. Assuming you live for seven years after the gift to your grandchildren, no IHT will be payable by you or your wife. The documentation should clearly show that the children own the beneficial ownership of the property and that the parents are merely the legal owners so it can be seen that the gift of money was to your grandchildren, and not to your son. You don't need to create a bare trust. Although HMRC are currently compiling a trust register, that doesn't apply for a bare trust situation like this where your son and daughter-in- law own the property in trust for their children.