Passing On Your Estate
Inheritance Tax is payable on everything you have of value when you die. It is usually payable on death, however, there are certain circumstances such as placing assets into certain types of trusts when Inheritance Tax becomes payable earlier.
Every UK Resident is entitled to a tax free allowance of £325,000 and most married couples are able to pass on assets without any immediate tax charge. However, most other transfers on death in excess of £325,000 will be subject to a 40% tax charge.
Helpfully, for those that are eligible the impact of Inheritance Tax will be softened or even eradicated due to the gradual introduction of the Residence Nil Rate Band between 2017/18 – 2020/21 which will mean that for those that meet the qualifying conditions £1 million of their estate will be exempt from Inheritance Tax from 2020/21.
Inheritance Tax is arguably one of the most disliked taxes levied in the UK and so a significant amount of our time is devoted to looking at opportunities to reduce the tax due on death. However, estate planning is not always purely about inheritance tax and there are a number of other factors that are likely to be considered before any strategy is implemented.
We have listed below some of the potential reasons to explore estate planning discussions with one of our team:
- Avoiding or Reducing Inheritance Tax.
- Keep your assets within your family.
- Protect your Nil Rate Band if you were to die and your partner re-marry.
- Protect assets passed to children/grandchildren from the risk of them becoming bankrupt or divorced.
- Protect your assets from possible creditors.
In some cases, the planning solutions may be quite straight forward but for others the solutions may need to be more complex and may involve several meetings possibly culminating in one with your Solicitor or a Solicitor specializing in Estate Planning.
The team at HFL has significant experience with using a number of trusts, life assurance and Business Property Relief based solutions that can help to achieve the above objectives. There is no ‘one size fits all’ financial solution and only by working closely with you will the most appropriate outcome be achieved which may involve a blended mix of inheritance tax solutions.