It sounds obvious, but the most important thing about making a will or estate planning is thinking about what your loved ones need. Let’s leave Mr Tax Man to one side for a moment and consider what you want, or can do, for your beneficiaries now and in the future.
You’ve heard the old adage that it’s good to talk. Well, no matter how difficult you may find it to discuss what happens when you’re no longer around, it really is important to talk to your family about what help they may need when you’re gone.
It’s rare that your assets will fit neatly with the all the needs of your beneficiaries, so don’t get too hung up on that to start with. Have the conversation first and then think about how to plan. Let’s bring Mr Tax Man back into the picture now, and remember an important point. He lives and breathes by rules and laws specifically designed to grab your money. The great thing about those rules though, is that if you start to plan early you can use the same rules to help keep his grubby mitts off a large chunk of your money when you die.
You might want to speak to a specialist to help you understand what will work best for you, but here are a few ways you can use those rules to help reduce the inheritance tax bill for your beneficiaries.
· A gift to your spouse. Assets that pass between spouses are free of tax. Even when you die. Important to note, this is not the case if you are not married or in a civil partnership. Getting married might be cheaper than you think…See my next article for more news on why getting married might save you thousands, and I’m not talking about the cost of the wedding!
· Gifts to others. There is a limit on this one, but you can make regular gifts to reduce the value of your estate during your lifetime, and the plus side is you’ll get to see your beneficiaries enjoy it.
· Trusts. In certain circumstances placing an asset into a trust can take it out of the inheritance tax pot, but beware, trusts come with other costs and associated taxes so be sure to get the right advice first.
· Owning tax exempt assets, such as farmland or agricultural businesses.
This isn’t an exhaustive list, but whatever you decide to give away, be sure you can do without it for the rest of your life. There’s no point saving on inheritance tax and not being able to live the life you’ve become accustomed to. Once you’ve given it away you can’t take it back!
This information provided in this article is not intended to constitute legal advice and each relationship breakdown requires careful consideration in our view by a fully qualified Solicitor before decisions are made and before you embark on a certain course of action.
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