The first and most obvious step into estate planning is making a Will, because if you don’t make a Will, in legal terms you will die ‘intestate’ and your estate may not go to the people you intended. Therefore making a will is vital if you want to be certain that your wishes will be met after you die, and it can also make sure you don’t pay more Inheritance Tax than you need to. It can be easy to put off making a will, but the process may not be as difficult as you may think.
It was Benjamin Franklin who said “the only things that are certain in life are death and taxes”
So what exactly is Inheritance Tax?
Inheritance Tax is the tax that is paid on your ‘estate’. Broadly speaking this is everything you own at the time of your death, less what you owe. It’s also sometimes payable on assets you may have given away during your lifetime. Assets include things like property, possessions, money and investments.
The rates of Inheritance Tax are 0% and 40% and its payable on everything you leave over £325,000 (2015/2016) and includes your investments and savings (including your ISA’s), your furniture and personal effects the proceeds of your life insurance, (unless it is written in trust) and your home and car.
However Inheritance Tax will usually not need to be paid on anything you leave to a spouse or civil partner who has their permanent home in the UK. Additionally gifts to charity are also tax free.
With planning it may be possible to reduce the Inheritance Tax bill payable on your estate after your death. If this is something that is of concern to you, we can help.
How Can We Help?
The famous quote by Lord Jenkins “Inheritance Tax is a voluntary tax, paid by those who distrust their heirs more than they dislike the Inland Revenue!” may not be quite so true these days however it remains that, with careful planning, potential Inheritance Tax liabilities can be considerably reduced or indeed, mitigated completely.
We have considerable experience in the design and implementation of IHT mitigation schemes for our clients. Some of these can be complicated, but there are also some basic inexpensive steps, which can create immediate benefits in the majority of cases.
In all aspects of Tax and Estate planning, we are happy to work in conjunction with your existing accountants and solicitors to ensure you receive the best possible outcome and continuity of service.