US Statesman, Benjamin Franklin, once commented: “In this world, nothing can be said to be certain except death and taxes.” Written back in 1789, this statement can still be argued to be true. But it’s also fair to say that we have better average life expectancy than we did back in the 18th century – and we can take steps to reduce our tax liabilities.
Inheritance Tax is a case in point. Although it’s only paid by a relatively small proportion of the population, it generated £5.2 billion for the UK Government for the tax year 2019-2020. As with all taxation, it’s wise to be aware of what your liability for Inheritance Tax may be and how this can be mitigated by prudent financial strategy and planning.
However, Inheritance Tax planning can be extremely complicated and we would strongly recommend that you speak to your Brunsdon Financial Adviser about it. They will provide you with guidance on the current threshold for Inheritance Tax, how that will be calculated and how much could be payable. They’ll then talk you through many aspects you’ll need to consider, such as:
Gifting during your lifetime
What are the rules around how much you can give, who you can give to and when.
To whom will you leave your assets?
You can leave any assets of any amount to your spouse or civil partner and they won’t have to pay Inheritance Tax. But what happens if they or you have remarried, or if you want to leave assets to your children, grandchildren or others who are important to you?
How can you reduce the liability for Inheritance Tax
Trusts and pensions are two ways in which liability for Inheritance Tax can be reduced. Would it be possible for you to leave all or some of your pension pot untouched by funding your retirement from elsewhere? Would it be wise to set up a Trust fund for one or some of your beneficiaries?
One of life’s inevitabilities
No-one likes to think about their own death, but (as Franklin pointed out) it is one of life’s inevitabilities. By thinking about what will happen after you’re gone, you will be helping and protecting those you leave behind.
The first thing you can do for them is to make sure you have an up-to-date Will and that your loved ones know where it’s kept.
The next thing we’d recommend you do is to discuss with your Brunsdon Financial Adviser the value of your estate, whether Inheritance Tax is likely to be due, and what you can do to reduce that liability.
Please do get in touch.
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