Inheritance
Tax Planning
The legacy of imprudence?
Couples - married or in civil partnerships - can now leave £624,000 of assets to their children, without incurring inheritance tax.
Inheritance tax on an estate is then payable to the Inland Revenue at a rate of 40% on the full amount of that estate over the current tax threshold of £624,000.
Single people are allowed to leave behind assets worth £325,000. When one considers a list of assets comprising a house, investments, savings, insurance, heirlooms, jewellery, cars and so on, an estate in excess of £500,000 is not uncommon nowadays. The 40% tax liability on an estate of this size would be £70,000. Moreover, this amount of tax might then have to be paid by your family to the Inland Revenue before the residue value of the estate might be realised. Just imagine the cost and consequences of having to fund such a level of tax liability for any period of time.
Keeping it in the family
By careful planning to conserve wealth now, you could reduce dramatically the burden of Inheritance Tax which might be placed upon your surviving family – and be certain that the full fruits of your lifetime endeavours will pass unencumbered to your loved ones, rather than be dissipated by the taxman!
Astute planning to reduce the burden of Inheritance Tax has to be a totally integrated financial approach, involving the correct structuring of will arrangements, a prudent distribution of assets to reduce the amount of tax that will have to be paid, and making provision to provide the funds necessary upon death to cover any remaining tax liability.
Avoiding the heartache
You may find the whole subject of wills and Inheritance Tax planning difficult to put your mind to. Children may also not find it at all easy to broach such subjects with their parents. However, careful consideration now can avoid considerable heartache in future – not least for a grieving surviving spouse caught up in a distressing financial mess when a will has not been made.
Different people require different planning to help them prepare their wills and to mitigate the impact of Inheritance Tax. An experienced financial adviser will be able to examine the planning and structuring necessary to satisfy your desires and to suit your family’s particular circumstances.
For an overview article and Discussion Forum concerning the simple tricks that can save hundreds of thousands of pounds of Inheritance Tax, visit ‘The Money Saving Expert’ website. You can also sign up for its Free Money Tips’ latest news mails.
You might like to call the Government’s useful Inheritance Tax Helpline on 0115 974 2400, for recorded information and individual advice.
Legal Matters
Many lawyers also specialise in the issues of inheritance tax planning, which would also, of course, form an integral part of will structuring. Click here to go to our ‘Legal Matters’ section – dedicated to specific issues such as Inheritance Tax Planning – and solicitors specialising in such cases.
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