In this podcast episode, I talk about how to make suitable plans to keep wealth within your own family following your departure. Inheritance tax can cost families thousands of pounds but there are ways to legally avoid paying this tax.
Key Takeaways
Without making suitable plans your loved ones could face the prospect of paying 40% tax on the value of everything you leave for them above a certain threshold.
Estate planning gives you control over what happens to your assets when you pass away. It also ensures that the assets are transferred in an orderly and uncomplicated fashion at a time when complicated financial issues are most unwelcome.
Write a will as this puts you in control of what happens to your assets as well as appointing who is in control of those assets and their distribution after your death.
Make a Lasting Power of Attorney. Consider preparing these documents to be ready to put in place should you become incapacitated from managing your own affairs
Plan for Inheritance Tax. Gift assets while you are still alive which you can do up to the value of £325,000. Gift allowances are up to the value of £3000 which cannot be taxed unless you survive 7 years beyond the date of transfer. Wedding gifts are allowable up to £1000 per person, or £2500 for a grandchild and £5000 for a child.
Consider investment in inheritance tax exempt assets. The Enterprise Investment Scheme gains tax relief via business relief subject to a 2 years holding period.
Life insurances kept in trust can avoid inheritance tax by being paid directly to your inheritors rather than your estate with no need for probate.
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