Planning for future generations
24th August, 2021
Nobody likes to think of a time when they are not around but planning what happens to your estate isn’t just about passing on money when you die; It’s also about being able to enjoy life now and making sure you have enough money to live – as well as do all the things you want to do! And this is why it’s important to start planning early.
What we do know is that Inheritance Tax planning (IHT) is a huge consideration and most people put it off for several reasons. Often, it’s an emotional subject and there is also so much advice out there it’s hard to know where to start. Many people simply put it off because it’s not a priority but whatever the reason, it’s important to start thinking about it as early as possible.
What is included?
Simply put IHT is payable on everything you have of value when you die. Here are a few things you may include:
- Your home
- Savings and investments
- Jewellery, works of art and cars
- Any other properties or land – even if they are overseas.
It is usually payable on death. But there are many planning options that you could consider to mitigate any potential Inheritance Tax liability, such as:
- Life Assurance
- Setting up a Family Investment Company
- Specialist Investments carrying IHT exempt status
- Utilising a non-UK domicile status.
Inheritance tax is a broad and complex area of tax planning and it’s important to get the right advice, so here are 10 things to consider:
- Are you making the best use of annual and other IHT allowances?
- Why you should have a Will in place, whatever your status – the Will is central to UK Inheritance Tax planning!
- Can you gift away any surplus annual income? And why you should evidence such gifts
- What options are available in passing ownership of your family home either to relatives or to your children
- The impact of a marriage, a birth in the family or a divorce
- Misconceptions about IHT charged on your gifts, especially those lifetime gifts made to adult and minor children
- The role of your favoured charity
- The 7-year IHT rule, and the impact of making successive gifts
- The tax implications of trusts, including bare trusts, life interest trusts and discretionary trusts
- Deceased spouse’s unused lifetime allowances. Assessing the impact of Capital Gains Tax on IHT planning and ensuring allowances and reliefs are used.
As with all tax planning matters, the earlier you discuss options with us, the more we can do to help. Every year that passes, you lose access to annual allowances!