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Estate & inheritance tax planning

Ensuring the people you love benefit most. Your wishes may be simple.

You’re likely to want to pass as much of your wealth to your loved ones as possible. And you’ll want to provide for your dependents, especially your spouse and children.

Estate & Inheritance Tax Planning Specialists

But inheritance tax is complex – and expensive.

Your estate could be liable to pay inheritance tax at 40% on all your worldwide assets, except for the first £325,000 (£650,000 if you are married or in a civil partnership) with an extra £100,000 or £200,000 “residence” nil rate band in certain circumstances.

The actual amount of inheritance tax your estate will have to pay depends on many factors like –

  • your domicile – the country HMRC deems to be your home for inheritance tax purposes (which is not necessarily the same as your domicile for income tax purposes)
  • your marital history
  • the location of your assets in the UK and around the world
  • the composition of your estate – property, cash, stocks, shares, art, antiques etc.

For example, if you have assets abroad, they will be liable to UK inheritance tax if you are domiciled here but not if your domicile is another country.

Or – to give just one other example – if you have been widowed, you may be eligible to transfer your spouse’s nil rate band, even if you lost your spouse as long ago as WWII.

Specialist advice for planning your estate efficiently

By structuring your estate tax-efficiently, HMRC’s claim on your estate could be minimised so your loved ones receive more of your wealth.

This may reduce the need for your beneficiaries to sell your assets quickly in order to meet inheritance tax bills.  It should also reduce the amount of paperwork for them and avoid costly disputes with HMRC.

Terry Jordan, our inheritance tax specialist, can assess your exposure to inheritance tax after reviewing your finances and family circumstances.

He is a renowned expert on estate planning, wills and trusts in the UK and overseas.

Preserving the value of your estate

Terry will ensure he thoroughly understands your wishes and personal circumstances.

Then he’ll help you structure your finances tax-efficiently by using:

  • the exemption for your spouse – inheritance tax is not normally payable between people who are married or in a civil partnership
  • your transferred nil rate band – if you have been previously widowed or lost  your civil partner
  • your residence nil rate band if available – if you qualify – the rules are complex
  • gifts to beneficiaries during your lifetime – small amounts are exempt and most amounts are exempt after 7 years
  • transfers of property in your life time – ensuring you are compliant with HMRC’s rules (e.g. by paying rent at the market rate to the beneficiaries)
  • reliefs on business or agricultural property – for eligible businesses, unquoted shares and property
  • trusts for children to prevent aggregation of wealth for married couples – especially useful if one or both spouses have death in service benefits or capital sums in pension plans (inheritance tax is payable when the second spouse dies)
  • lifetime trusts for your beneficiaries – especially useful for assets that are pregnant with capital gains (e.g. shares or properties that have significantly increased in value since they were purchased)
  • life insurance to cover inheritance tax liability  – particularly useful if:
    • your spouse is not domiciled in the UK
    • you are planning to leave the UK and want to cover the UK inheritance tax liability on your worldwide assets in the event of your premature death
    • you want your beneficiaries to keep an asset (e.g. a house) rather than sell it to pay inheritance tax
  • leaving 10% of your estate to charity so that the remainder of your estate is taxed at 36%, not 40% – particularly useful if you already intend to leave money to charity
  • structuring your worldwide assets for tax efficiency – because
    • if you are domiciled in the UK, you may have to pay inheritance tax on your worldwide assets
    • non-UK assets may be subject to the equivalent of inheritance tax in those countries and some countries have forced heirship laws (e.g. France where you may compelled to leave a minimum percentage of your assets to your children).

Planning your estate

Terry can take care of everything for you, including:

  • structuring your estate for inheritance tax efficiency – taking account of your foreign assets and ensuring there are no unforeseen consequences to your current financial situation
  • wills – writing your will so you can preserve the value of your estate and determine how it is distributed after your death (it’s essential to have a will to ensure maximum IHT efficiency)
  • trusts – assisting with the drafting of trust documents for preparation by solicitors
  • lasting powers of attorney – preparing documents so you can appoint people to make decisions about your health & welfare or property & financial affairs or both if you become incapacitated.

Providing for your dependents through life insurance

You can ask Terry to arrange life insurance through our team of trusted independent financial advisers.

He’ll help you to calculate how much you need to provide for your dependents and whether they’d be better off with a lump sum or annual payments.

He can also arrange life insurance to cover inheritance tax liabilities if you wish.

Varying wills that are disputed or inefficiently structured

Wills can be changed after a person’s death provided all the affected beneficiaries agree.  It is usually done by a Deed of Variation and is legally binding.

Terry can recommend changes to improve tax efficiency and assist with the drafting of deeds of variation for preparation by solicitors.

For more information or help from one of our tax specialists, please contact us using the enquiry form below.