Inheritance tax (IHT) revenue has steadily increased over the last few years, largely as a result of the increase in house prices, particularly here in the South East of England. Where an estate does fall to be taxed, any amount over the available nil rate bands will suffer tax at a whopping 40%. That means only 60% of that excess will go to the intended beneficiaries – and that could be you losing your inheritance unnecessarily!
In fact, with careful estate planning it is usually possible to save substantial amounts of potential IHT, often with quite simple and not very costly planning. On other occasions more complex inheritance tax planning is required, but this will mean that a lot of tax is at stake and so the additional costs of planning are worthwhile.
I have recently been carrying out estate planning for some of our clients’ parents and in every case I have been able to make suggestions to reduce the tax burden significantly. Whereas the parents themselves are pleased that their IHT tax bills will be less, their offspring are even more grateful that their eventual inheritance will be increased. Perhaps they will be able to afford the yacht after all!
So what size estates will have to pay IHT? This very much depends on not only the monetary valuation of the assets, but also what is comprised in the estate, the marital status of the deceased, who the assets are passing to and what gifts have been made previously. It’s simple really!! Currently estates of anywhere from £325,000 upwards may need to pay IHT.
If you have parents who may have IHT to pay why not start the new year by treating them to an estate review – after all it will benefit you in the long run. Our clients agree that this type of forward planning is very tax efficient and helps them to understand the estate that they may have to administer when their parents die.
You don’t have to be a client to access our Estate Planning for Your Parents service. The service includes a 2 hour meeting, preparation of an asset list and a follow up report with calculations and planning suggestions. As well as IHT savings we will review the Wills and talk about the benefits of Lasting Powers of Attorney where none are in place. Of course the meeting can be for you instead if you’re the one with the IHT problem.
If you’d like to book a meeting please contact Jan on 01634 731390 or at firstname.lastname@example.org
The content in this blog is correct as at 8th February 2019. See terms and conditions.