Estate Planning2024-04-05T19:59:28+01:00

A staggering *50% of adults do not have a will and may be leaving more of their estate to the taxman than necessary

Protect your loved ones and assets now through simple estate planning

A staggering 58% of adults fail to organise their financial affairs and may be leaving part of their estate to the taxman

Protect your loved ones and assets now through simple estate planning

* Research based on a survey of 2000 UK adults, commissioned by Canada Life and conducted by Opinium.

After working hard all of your life, you now want to preserve and protect your wealth and be sure of leaving a lasting legacy for those loved ones you leave behind.

However, your estate may be liable to Inheritance Tax (IHT) and much less than you thought could be passed onto your beneficiaries.  Paying Inheritance Tax is not completely out of your hands. Whether you are taking a principled or practical stand, you have some control.

Take the time to evaluate whether or not Inheritance Tax could become payable. Planning well in advance is the best strategy.

Without the right professional advice, HM Revenue & Customs may become the biggest beneficiary of your estate following your death. All the assets you hold on death need to be valued, including reliefs and exemptions to calculate the value of your estate and the liability to Inheritance Tax.

Don’t leave it to chance – get in touch for a review of your situation and ensure your hard-earned assets are passed on quickly to the ones you love.

Inheritance Tax Planning

You have worked hard to build your wealth.

Passing it on to the next generation fairly, safely, effectively and efficiently takes skill and careful preparation. But some people find the idea of discussing inheritance uncomfortable and subsequently put off estate planning until, in some instances, it may be too late to make a difference.

Seeking advice early about the options to mitigate your inheritance tax liability is a sensible move.

Future Needs And Asset Review

By looking at your future needs and reviewing all your assets, including investments, property, businesses, pensions and life assurance – and by gifting and utilising investment reliefs – we can advise you how to plan the most effective way to pass on your wealth.

But as property prices make IHT more of a reality for many in the UK, it can impact on families with even quite modest assets – including those who have been basic-rate taxpayers all their lives.

Failing To Put Your Financial Affairs In Order

It can be difficult to accept that you have to pay tax on your estate – which has usually been accumulated out of taxed income – and that your heirs will not reap the full rewards of your hard work.

However, many people who end up paying Inheritance Tax do so because they have failed to put their financial affairs in order in advance.

If you create a proficient estate plan, neither you nor your heirs may have to pay Inheritance Tax at all.

Property Keys - Inheritance Tax Planning

How Much Is Inheritance Tax?

The first step in Inheritance Tax planning is to understand how inheritance tax works and to find out how much the tax bill might be. This isn’t easy, bearing in mind the ever-changing values of property and other assets, plus changing legislation. Inheritance Tax is levied at a fixed rate of 40% on all assets worth more than the £325,000 nil-rate band threshold per person. Your tax rate may be reduced to 36% if you leave 10% or more of your estate to charity.

Your estate (including any gifts made by you) can pass inheritance tax–free to a spouse or registered civil partner living in the UK. This can give you a joint allowance of £650,000.

Family Home Allowance

From 6 April 2017, a family home allowance (known as the ‘residence nil-rate band’) was added to the Inheritance Tax threshold. This is currently at £175,000 and applies where a home is left to direct descendants (such as children or grandchildren) of the deceased. Like the nil-rate band, any unused portion is transferable between spouses and registered civil partners.

Please get in touch if you require help in calculating your Inheritance Tax Liability.

Mitigating Inheritance Tax

There are effective and legitimate ways to mitigate against the impact of inheritance tax. But some of the most valuable exemptions must be used seven years before your death to be fully effective, so it makes sense to consider ways to plan for inheritance tax sooner rather than later.

Make A Will

One of the most important things you can do to help reduce the amount of Inheritance Tax you could be liable to pay is to write a Will. If you die without a Will, your estate is divided according to a pre-set formula, and you have no say over how much tax is payable. Dying intestate (without a Will) means that you may not be making the most of the Inheritance Tax exemption if you wish your estate to pass to your spouse or registered civil partner.

If you don’t make a Will, then relatives other than your spouse or registered civil partner may be entitled to a share of your estate, and this might trigger an Inheritance Tax liability. You also need to keep your Will up-to-date. Getting married, divorced or having children are all key times to review your Will. If the changes are minor, you could add what’s called a ‘codicil’ to the original Will.

To get in touch with our Will Writing Partner, please click the button below:

Legal Document Will

Make Lifetime Gifts

Gifts made to an individual or to a bare trust more than seven years before you die are free of inheritance tax, so it might be wise to pass on some of your wealth while you are still alive. This will reduce your estate’s value when assessed for inheritance tax purposes, and there is no limit on the sums you can pass on.

You can gift as much as you wish, and this is known as a ‘potentially exempt transfer’ (PET). If you live for seven years after making such a gift, then it will be exempt from Inheritance Tax. You need to be particularly careful if you are giving away your home to your children with conditions attached to it, or if you give it away but continue to benefit from it. This is known as a ‘gift with reservation of benefit’.

You can make certain gifts that are given favourable Inheritance Tax treatment:

  • Charitable gifts made to a qualifying charity during your lifetime or in your Will

  • Potentially exempt transfers (PETs). If you survive for seven years after making a gift to someone, that gift is generally exempt from Inheritance Tax

  • You can give away up to £3,000 each year, and you can use your unused allowance from the previous year for one tax year.

  • You can make small gifts up to £250 to as many people as you like Inheritance Tax–free, as long as you have not used another allowance on the same person.

  • Weddings and registered civil partnership gifts are exempt up to a certain amount

  • You can make regular gifts from surplus income after tax, but these need to be documented and lead to no reduction in standard of living for you as donor.

If you want advice on the most effective strategy to mitigate your inheritance tax liability, then get in touch:

Using Life Assurance, Business Relief and Trusts

If you don’t want to lose control or give away your assets during your lifetime, then consider taking out life cover, which can pay out an amount equal to your estimated inheritance tax bill on death, or set up a Trust using investment solutions that take advantage of Business Relief.

What is a Trust?

Some people who make gifts to reduce Inheritance Tax are concerned about losing control of the money.

This is where trusts can help. When you set up a trust, it is a legal arrangement, and you will need to appoint ‘trustees’ who are responsible for holding and managing the assets.

Trustees have a responsibility to manage the trust on behalf of, and in the best interest of, the beneficiaries in accordance with the trust terms. The terms will be set out in a legal document called the ‘trust deed’. You need to bear in mind that there might be tax consequences if you set up a trust.

The rules around trusts are complicated, so you should always obtain professional advice.

Avoid Inheritance Tax - Make a will

Business Property Relief

Business property relief can be a very effective way to remove assets from your estate but still have full access to the funds if needed in the future.

You can hold shares in the portfolios of certain companies; they are considered business assets and attract 100% relief from Inheritance Tax. You’ll only need to hold these shares for two years to qualify for business property relief. Investments eligible for Business Property Relief are generally considered higher-risk investments and may not be considered suitable for all types of investors.

If you want advice on the most effective strategy to mitigate your inheritance tax liability, then get in touch.

Insurance Policy

If you don’t want to give away your assets while you’re still alive, another option is to take out life cover, which can pay out an amount equal to your estimated Inheritance Tax liability on death. It’s essential that the policy is written in an appropriate trust, so that it pays out outside your estate.

One option could be to purchase a whole-of-life assurance policy, designed to provide funds to the beneficiaries of your estate in the event of your death, to meet the cost of any Inheritance Tax bill payable.

Client Testimonials

We have known Tony for many years and sought his help following family illness that led to us needing extra help with financial matters.

He has helped us with investing pensions and setting up a trust fund for the family in future years. We are still working on inheritance planning.

Julia, November 2018

Make sure your assets are passed onto your loved ones, call Tony on:

Mobile: 07585 592494


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