Inheritance Tax Planning

When you die, you may want to leave all of your estate to your loved ones, but HMRC may have other ideas. Inheritance Tax is paid on your estate, which is basically everything you own at the time you die. Sometimes it is also payable on assets you may have given away during your lifetime.

Increased house prices and personal wealth have contributed to pushing more and more people over the current Inheritance Tax nil rate band (£325,000 from 6 April 2009/10). Any nil rate band which was unused by a deceased spouse or civil partner can now be transferred to a surviving spouse or civil partner who dies on or after 9 October 2007. Nevertheless on death an estate could face a hefty inheritance tax bill of 40% on anything over the nil rate band.

Inheritance Tax can be a real financial headache for your beneficiaries when they need it least. For example, the Inheritance Tax bill must usually be paid before the estate can be distributed. This means that your beneficiaries may experience a delay in receiving what you have left them.

It is important to review your will on a regular basis. It should be updated following important changes in your life, such as a birth of a child, divorce, re-marriage, death of a spouse or civil partner. If you need to update your will, John Eames Limited will be happy to put you in touch with one of our solicitor contacts.

Ensuring an adequate will is in place is one of the ways to reduce the Inheritance Tax on your death. Other legitimate means are using the annual gifting exemptions, life assurance and approved tax mitigation planning Trusts.

Creating a Trust allows the donor (“Settlor”) to gift during their lifetime to a specifically named or range of beneficiaries, such as children and grandchildren, to ensure that assets are looked after in line with their wishes. Trustees are appointed to hold the assets of the Trust for the benefit of the beneficiaries. John Eames Limited can advise you on the most suitable way to mitigate Inheritance Tax.