Estate and Tax Planning

Appropriate estate and tax planning will help to ensure that the right people inherit according to your wishes and inheritance tax is minimised.

The first step is to ensure you have a current Will which has been correctly drawn up to represent your wishes. Wills should be reviewed regularly particularly following life changing events such as marriage, divorce, births etc.

Depending on the value of your estate it will also be necessary to consider your likely inheritance tax (IHT) liability and ways to reduce this.

We can help you review the structure of your estate and recommend ways to reduce your IHT liability.

IHT is payable on your estate when you die and can also be payable on Trusts and lifetime gifts and will include all assets whether owned individually or jointly. No IHT is payable on assets up to the value of the Nil Rate Band (currently £325,000) but anything above this will be taxed at 40%. Assets include property, investments, insurance, pensions and other possessions such as cars and jewellery.

There are a number of matters to be considered when reviewing potential IHT liability including:

  • Exemptions - such as moving assets between spouses/civil partners
  • Making gifts - gifts fall outside IHT if they were made more than 7 years before your death and taper relief may also be available for those within 7 years
  • Drawing up a Trust - there are different types of trusts and we can discuss the various formats with you
  • Gifts out of excess income - these must be recorded as your executors will need to claim these after your death. There are restrictions on what you are allowed to give
  • Writing insurance in Trust - taking out a whole of life policy to cover the cost of your IHT liability which is then paid immediately on your death without the need to wait for grant of probate
  • Charity - making a gift of 10% of the value of your estate will reduce your IHT rate to 36%
  • Business Property Relief - reduces the value of a business or its assets when calculating IHT liability
  • Main Residence Nil Rate Band - introduced in 2017/18 tax year, this will make it easier to pass on the family home to direct descendants with a reduced tax charge