Inheritance Tax

It is said that the only certain things in this life are death and taxes. A hermit might take issue with his or her tax rate, but in the main, we aim to pay as little tax during our lifetimes as we can; but even when we pass on our estate might still be taxed.

What can we do?

We all have an allowance that escapes taxation. If our estate is valued below that threshold, no tax is applied. If the estate is worth more than these allowances, some actions can reduce exposure to tax. It is also possible find ways to provide the funds to pay the tax rather than your intended beneficiaries having to pay.

Why is a Will important?

If you die without a valid Will, you are deemed to have died intestate. Dozens of flow charts will show you what happens to your estate if you prefer intestacy rules to make a Will. If you have no Will, I suggest making some checks – or what you leave behind might all go to HM Treasury.

You should list your assets and total the value. You may need clarification on which allowances apply to your estate (for example, whether you have children, are married or are in a civil partnership). If clarification is required, talk with an Independent Financial Planner. A planner will tell you whether you have a problem. If you do, what are the options, and do you need legal advice? Sometimes it can be very straightforward, sometimes not.

Did you know that unlimited gifts between spouses are not taxed? Therefore, the issue shifts to the death of the survivor. Do you know the annual gift allowances? What impact could a deed of variation have? How do trusts help?

Recently I advised on an estate where the largest portion of the estate was set to go to in taxes, and that sum would be greater than any of the individual children. This has been rectified.

If in doubt, speak with an Independent Financial Planner.

Eamonn Dorling Dip PFS

Senior Independent Financial Adviser

Brooks Wealth Management