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Setting up a pension for the grandchildren

Contributions of just £2,880 per annum until Lucas is 18 could equate to a pension fund of nearly £600,000 when Lucas reaches 55 if it grows by 5% each year. From 55, Lucas has the option to withdraw up to 25% of the fund (£150,000) tax free.

Regular gifts made from ‘normal expenditure out of income’ will also be excluded from Ulrik and Silvia’s estate for inheritance tax purposes.