services

 

Estate Planning

 

Estate planning is not regulated by the Financial Conduct Authority.

 

WHAT IS INHERITANCE TAX (IHT)?

Inheritance tax is commonly referred to as a 'gift tax' or 'death tax.' If, at the time of your death, you pass on part or the whole of your estate, then the inheritor could be liable to pay inheritance tax.

 

IS IT TRUE THAT IHT IS A "VOLUNTARY TAX" AND CAN BE LEGITIMATELY AVOIDED?

In a nutshell this is true. If one plans his or her estate properly (and avoids a premature death), there is absolutely no reason why they should pay any IHT whatsoever. Roy Jenkins, the former Labour Chancellor of the Exchequer, famously described IHT as "a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue..."

 

IF I LEAVE MY ENTIRE ESTATE TO MY SPOUSE, WILL THERE BE ANY IHT TO PAY?

No. All gifts between husband and wife are exempt from tax as long as they are both domiciled in the UK. This means that even if a husband has an estate valued at £10 million pounds, then he can gift this to his wife. It does not matter if it was gifted during his lifetime or at the time of his death; either way, his wife will incur no tax liability.

 

WHAT ARE SOME SIMPLE ACTIONS I CAN TAKE TO REDUCE IHT?

First and foremost, it is essential to have an IHT efficient will. This is particularly important for married couples. In my professional capacity.

 

Perhaps the second easiest and least costly planning method is to ensure that a proportion of the family home is transferred to resident children. This can be achieved using a family trust thus enabling the parents to retain effective control of their principle asset. This is quite a complicated issue and can have serious adverse Capital Gains Tax and Stamp Duty effects if implemented incorrectly, as well as being ineffective for IHT mitigation. It therefore should only be undertaken with appropriate professional guidance.

 

The next obvious planning method involves gifting assets to the next and future generations either directly or via some form of trusts. In some cases it is possible to do this without relinquishing control of the asset, and in certain circumstances retaining an individual right to income.

 

 

Trusts

 

Trusts are not regulated by the Financial Conduct Authority.

 

Trusts can play a major part in Inheritance Tax planning. The effectiveness of the trust may be spread over a period of years, although in other cases, for example Discounted Gift Trusts, there can be a substantial immediate effect in reducing IHT liability.

 

In addition to their usefulness for IHT planning, Trusts serve various other purposes. Not least of these is that of avoiding the probate process and the delays this can create in settling family affairs in the event of bereavement.


If you would like more information, please contact us.

 

Wills

 

Will Writing is not regulated by the Financial Conduct Authority.

 

Will Writing is not part of the Intrinsic Financial Services offering and is offered in our own right. Intrinsic Financial Services accept no responsibility for these aspects of our business.

 

Why is it necessary to have a will?

 

Simple will planning is often the cheapest and most effective form of IHT planning. It also saves your family a lot of problems after you have departed. Many people assume that their estate will pass to their surviving spouse in the event of their death. This is simply untrue. The intestacy rules will distribute the estate in accordance with a formula laid down in law depending on the size of the deceased's estate and their surviving relatives. It is therefore imperative that a will is in place.

 

In the case of unmarried couples, without a will the survivor may have very few rights.

 

Even married couples, where a partner is of overseas origin, can find that their IHT tax exemptions are much lower than expected.

 

For further information, please contact us.

 

Sign up for

eNews Alerts

 

 

Sign up for our free eNews alerts service and get the latest financial and property news updates sent straight to your inbox.