Inheritance Tax
Our belief is that everyone should have a will and consider what problems their loved one could face should the worst happen. Taking action now enables a smooth transition to the next generation as well as minimising tax liabilities. It will also focus the mind on important issues such as proper life assurance arrangements.
It is important for the wealthy and self employed to take action to review the whole aspect of succession planning to minimise tax but also to remove a lot of uncertainty.
Employed people are also advised to do the same. However, the employed person is likely to have a work related pension scheme and through that some life assurance arrangements. Their employer will be able to replace them more easily than a family often not fully involved in the business.
We will work with your solicitor and IFA, or we can suggest our professional colleagues, to get the best solution for you. This is important as there will be elements of financial advice and IHT will payable will be in accordance your will.
It is important to know if a relative dies leaving an estate worth more than £325,000, families are required to pay tax on a proportion of the money and property left to them within six months. After that, they are charged interest.
Your estate could include more than you originally realise. It is often easy to dismiss IHT as something that may not affect you as your property may not be over, or much over, the IHT threshold. However with all your other assets, such as investments, life cover, bank accounts, as well as physical property such as cars, furniture and family heirlooms, many estates are considerably over the threshold without the individuals being aware of it.
Many people say that this is an optional tax, as since October 2007 assets passed between spouses and civil partners, the nil rate band allowance will now pass along with the assets. This gives a couple available allowances (nil rate bands) of up to £650,000.
Succession planning is important because even if your spouse to inherits the estate, this only delays the time when tax will be payable as he or she will also pass away one day.
Some forward planning with an adviser to decide whether it would be appropriate to gift part of your estate either to your children or other relatives, during your lifetime, or possibly to redirect some of your assets into a trust on death. Taking action now can avoid IHT and give you some control on how your hard earned money is spent in the future.