Inheritance Tax

Inheritance tax planning

Are you liable to Inheritance Tax?

The first £325,000 (2010/2011) of an individual's estate is taxed at 0% and is therefore not liable to Inheritance Tax.

For married couples and registered civil partners it is currently £650,000, if the full allowance is passed to the surviving spouse. Anything in excess of this amount is taxed at 40% on death. The following courses of action can mitigate Inheritance Tax: Ensure your Will is written and planned correctly to save the maximum amount of tax Transfer assets through the prudent use of lifetime gifts Create a tax-efficient fund to enable the beneficiaries of an estate to meet the tax liability without disturbing the family wealth.

Under current IHT legislation, pensions can play a considerable role in estate planning.

Having sufficient retirement income may release capital for lifetime giving. Although pension death benefits are broadly exempt from IHT, if they are passed to your survivor they will form part of their estate.

Wills

 

By failing to arranging a Will this could mean the deceased person's assets are passed to the 'wrong' people. Alternatively and in addition the value of their estates could become subject to unnecessary Inheritance Tax. Should you die without having drafting a valid Will you are considered to have died 'intestate'.

In this situation the law lays down a standard set of rules for the distribution of your assets.

Dying intestate can be very complicated, particularly when the deceased person has children.

A Will can be prepared in a matter of hours typically costing around £120 for a single will and £180 for a joint will.

The potential savings from this initial outlay could be very significant. Should you need assistance please contact us and we can help you further.