Being an executor: Call to change tax rules
If you are acting as an executor for your friends and family then you may face having Inheritance Tax bills yourself which you’ll have to pay with your own money if settling the estate takes more than a few months.
Trust and Inheritance Tax: Five good reasons to use a trust
Trusts take an important role when estate planning. Trusts ensure assets can be easily managed by trustees and that the assets can be ring-fenced.
Deed of variation
If your estate is worth more than £325,000 then your beneficiaries will be faced with an inheritance tax bill of up to 40% of any amount over that sum on your death. For married couples, you can add together your £325,000 threshold and have a £650,000 threshold for IHT reasons, reducing IHT for your beneficiaries.
You will need to review your will
The use of nil rate band discretionary trusts in wills were very common for those who exceeded the nil rate band limit in 2007. This means that if you left your estate in a discretionary trust on the second death, you need to review your will as soon as possible.
Who should you leave your home to on death?
LV Legal Services says that over 1.7 million people who are 55 plus have the potential to miss out on the newly increased nil-rate band as they have left the family home to a sibling rather than a direct descendant. One in 10 over 55s have decided to leave their estate to a sibling, meaning the new residential nil-rate band will not apply and will disqualify them from being able to use it.
Tax benefits for married couples in the UK
Marriage or civil partnerships, in the eyes of the law makes a large difference to a couple’s financial status. If you just live together, you could lose out on Inheritance Tax mitigation strategies, even if you have been partners for a long period of time.
Gifts out of income
Making gifts from your income to avoid Inheritance Tax
One question which always gets asked: How can I reduce inheritance tax on my estate when all my capital is tied up? One answer to that question is that if you can afford it then you can make lifetime gifts of capital. This is one of the most effective IHT planning strategies.
Gifts to grandchildren
It is rare for most people to make direct gifts to grandchildren in their wills as they would normally just pass it down to their children with the option of them passing it on to their children; however this is not the most tax effective way of doing it. Forward thinking can reduce the eventual overall tax.