Inheritance Tax (IHT) could cost your loved ones dearly when you die, yet it is possible to legally plan to avoid this. Our agenda includes quite a wide range of options you can implement depending on your circumstances both now and as time goes by.
Inheritance Tax is only owed if the value of the deceased’s estate (or a transfer in connection with a trust) exceeds the IHT threshold (325,000 up to 05/04/2020). The executor or personal representative of the deceased’s Will have to pay the tax from the deceased’s estate (or the trustees would pay the tax on trust assets) within 6 months of death to avoid accruing interest. This is usually before the Grant of Probate is issued and can mean the executor has to either borrow the money or even pay it from their own funds because the assets are still tied up in the estate e.g. couldn’t sell the house in time.
So where do you start with planning? The first place is to visit the range of exemption and allowances the Government has put in place. These are worth pursuing and will make a difference over time, but typically will not solve the problem as quickly as you would want.
What has to be considered in the equation is your age and health, also the make up of your estate assets and liabilities, and then there is your family set up to understand. These factors help us to get to know you and focus on the right solutions. Here is a short list of the major ones to think about:
Why does IHT exist? Without IHT the children of the rich stay rich, so IHT is there to redistribute money that goes to the State so it can be used to fund benefits for the needy. However when earned money has been taxed, paying tax a second time around is unfair.
After rocketing house prices, many more people are getting caught in the IHT trap, and of course the current threshold hasn’t been changed since 06/04/2009 so it is catching more and more of us. A lot of us don’t realise that we only have to receive an inheritance from parents or grandparents, and usually there are two sets of each, and this can push the estate value of the recipient well over the IHT threshold this can easily be avoided with careful planning.
What should you do next? 2 crucial things..
Please contact us as we can help you solve this problem.