A professionally drafted will can ensure that your estate passes to your loved ones in as tax-efficient way as possible.
With asset prices and property prices increasing, more and more people’s estates are falling subject to inheritance tax when they die.
At Hancock Quins Solicitors in Watford, we can advise you on various measures to mitigate potential inheritance tax on your estate.
When is inheritance tax payable?
Each individual is entitled to leave a certain amount on death before inheritance tax is charged. This is called your nil rate band and the amount is currently £325,000.
If an individual dies with an estate worth more than £325,000, their estate is liable to pay inheritance tax at a rate of 40 per cent on the value over the nil rate band.
If you leave your estate to a surviving spouse, there are no inheritance tax implications as the estate qualifies for what is known as the spouse exemption. On the surviving spouse’s death, he or she is eligible to transfer any unused nil rate band from their deceased spouse’s estate, which would result in a total of £650,000 being passed on tax free.
The use of trusts
Trusts are useful when:
- the value of your estate exceeds the nil rate band;
- you have large potential death in service benefit payable;
- you are selling a business; or
- you have vulnerable beneficiaries to protect.
It is possible to set up trusts to ensure that your own, your spouse’s or your children’s estates receive the benefit of your assets in as tax efficient way as possible. These trusts can be set up either via your will, during your lifetime or a combination of both.
We offer advice on the tax benefits and responsibilities involved for trustees. Trusts are run and managed by trustees for the benefit of named beneficiaries. We can advise on the suitability of your chosen trustees and we can also act as a professional trustee; either on our own or in conjunction with a family member to ensure there is a balance of expertise.
In addition to ensuring your will is tax efficient, you can also take measures during your lifetime to minimise the inheritance tax due by reducing the assets you own at death through lifetime gifts to your loved ones.
We are able to advise you on various methods of lifetime gifting and the inheritance tax consequences for your estate.
Some investments qualify for full or partial relief from inheritance tax if they are invested in certain assets that attract business or agricultural property relief. Investing in these types of assets can be of great benefit as they acquire their tax-exempt status far quicker than by making lifetime gifts.
Gifts to charity are tax free and can also reduce the size of your estate for inheritance tax purposes. If you leave at least 10 per cent of your net estate to charity, you can reduce the inheritance tax rate from 40 per cent to 36 per cent on the rest of your estate.
Inheritance tax planning with Hancock Quins Solicitors goes hand in hand with financial advice and planning and we work closely with financial advisors who specialise in this area of wealth management.
Why choose Hancock Quins?
We have many years of experience in this field and would be very happy to discuss matters with you in more detail, either when taking your instructions for a will or in connection with general inheritance tax and financial planning.
- fast, efficient and friendly advice about managing the financial affairs of your estate;
- highly respected lawyers experienced in drafting wills and financial planning;
- assistance in setting up trusts; and
- advice on the methods of lifetime gifting to friends, relatives & charities.