[vc_row equal_height=”yes” content_placement=”middle” lg_spacing=”margin_top:30″ gutter=”lg:0″][vc_column md_spacing=”padding_top:500″][vc_row_inner background_color=”custom” lg_spacing=”margin_right:0;margin_left:0;padding_top:20;padding_right:0;padding_bottom:20;padding_left:0″ xs_spacing=”padding_right:35;padding_left:35″][vc_column_inner][tm_heading tag=”h2″ custom_google_font=”” text=”Why Do I Need To Plan My Estate?” css=”.vc_custom_1558090166146{border-bottom-width: 1px !important;padding-top: 25px !important;padding-bottom: 27px !important;border-bottom-color: #d4d2d2 !important;border-bottom-style: dashed !important;}”][tm_spacer size=”lg:30″][tm_heading tag=”div” custom_google_font=”” text=”When a person dies, the value of their estate becomes liable for Inheritance Tax. In the UK your estate includes everything you own, including your home, vehicles, belongings and certain trusts in which you may have an interest. However, everyone is entitled to leave assets of up to \u00a3325,000 tax free.<\/p>\n
Everything under the \u00a3350,000 limit is called the \u2018nil-rate band\u2019. Married couples and registered civil partners can share their thresholds, with the unused element of their tax-free allowance rolling over to their surviving spouse when they die. This means a married couple or couples registered in a civil partnership, have a joint \u2018nil-rate band\u2019 of \u00a3650,000.” css=”.vc_custom_1557320792184{border-bottom-width: 1px !important;padding-top: 25px !important;padding-bottom: 27px !important;border-bottom-color: #d4d2d2 !important;border-bottom-style: dashed !important;}”][tm_spacer size=”lg:30″][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row equal_height=”yes” content_placement=”middle” gutter=”lg:0″][vc_column custom_border_color=”#dddddd” md_spacing=”border_top:1″][vc_row_inner background_color=”custom” lg_spacing=”margin_right:0;margin_left:0;padding_top:20;padding_right:0;padding_bottom:20;padding_left:0″ xs_spacing=”padding_right:35;padding_left:35″][vc_column_inner][vc_column_text]<\/p>\n
In April 2017 an extra allowance was introduced by the Government stating that when a residence is passed to a \u2018direct decendant\u2019<\/strong> it is known as the residence nil-rate band (RNRB)<\/strong>, and like the standard nil-rate band, unused elements of the allowance roll over to a surviving spouse or civil partner.<\/p>\n Last financial year, (the 2017-18 tax year), the RNRB was \u00a3100,000 per person meaning a married couple with children can leave a maximum of \u00a3850,000 in total, exempt of inheritance tax<\/a>. Any excess is then taxed at 40%.<\/p>\n The RNRB are set to rise in increments to \u00a3175,000 by April 2020. After this, couples will be able to free to leave up to \u00a31m tax free when they die.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row equal_height=”yes” content_placement=”middle” gutter=”lg:0″][vc_column custom_border_color=”#dddddd” md_spacing=”border_top:1″][vc_row_inner background_color=”custom” lg_spacing=”margin_right:0;margin_left:0;padding_top:20;padding_right:0;padding_bottom:20;padding_left:0″ xs_spacing=”padding_right:35;padding_left:35″][vc_column_inner][vc_column_text]<\/p>\n In addition to nil-rate bands there are a number of tax relief strategies and exemptions that with careful estate planning<\/a>, can be used to reduce your inheritance tax. However, many families fail to account for inheritance tax for many reasons including feeling uncomfortable talking about their wealth\/estate or not liking talking about death.<\/p>\n However, if passing on your estate in the most financially savvy way is important to you, talking about inheritance is inevitable and important.<\/p>\n Here are the most important steps in planning your Estate:<\/p>\n Writing a will is the most appropriate point of entry when estate planning. It is essential that you have an up-to-date will<\/a>, to ensure your estate goes to who you choose and that all your wishes are carried out.<\/p>\n If you have a will already, it might be wise to make a review of it<\/a> and make sure it reflects your current wishes regarding who should inherit what. In order to benefit from the residence nil-rate band, assets must be left to direct descendants. A lot of older wills hold assets in trust<\/a> that might not reflect the most financially economical choices in current times.<\/p>\n Make sure you take legal advice<\/a>.This is the only way to make sure your wishes are met and your wills are as tax-efficient as possible. Ask your advisor about making mirror wills with your spouse. This means leaving the estate to the other in the event of death. However, you might want to make a will that leaves selected assets to children or grandchildren.[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n Some people choose to make gifts from their estate whilst they are still alive. This can be beneficial for inheritance tax purposes<\/a>, though only in certain circumstances. Here are the rules:<\/p>\n Gifts of any size are allowed to be made to charities or political parties. These will be tax free. If gifts are regular, come out of your wage and do not affect your standard of living, you can gift any amount of money without being liable for IHT.<\/p>\n Any other, larger monetary gifts must be made seven years before your death to be considered outside of your estate for IHT purposes. If you die within seven years and the gifts are worth more than the nil-rate band, taper relief will be applied which means the tax reduces on a sliding scale if the gift was made between three and seven years earlier.[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n Couples generally own their home as joint tenants<\/strong>. If one partner dies, the other automatically inherits the whole property. Others choose to be tenants in common<\/strong>. This means a set share of the property is owned by each. This enables each partner to leave their share of their property to someone other than their spouse. This might be because children are involved for example. In this case, an IHT bill can be reduced and long-term care costs can be avoided. However, it\u2019s a complicated decision, and should be discussed by a financial expert.[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n Pensions are a tax efficient way to distribute your wealth upon your death. If you die before you reach 75, any benefits left in a money purchase pension<\/strong> can be left as a lump sum<\/strong> or drawdown income<\/strong> to any beneficiaries, no tax liable. After the age of 75 tax will be charged at the beneficiaries\u2019 marginal income tax rate.<\/p>\n Other options include using other investments to provide a retirement income<\/a> meaning that funds remain in your pension for as long as possible.<\/p>\n In effect, you can leave your pension to your children, and then they can leave it to their children and so on. Trusts can reduce your inheritance tax bill<\/a> and give you control over how your assets are used by future generations.<\/p>\n Trusts can help you:<\/a><\/p>\n Trusts<\/a> however are complex matter. If you die within seven years of transferring parts of your estate into a trust, your estate could be liable to pay IHT at the full amount of 40%.5 A Life assurance policy can be put in place to either pay off or reduce a potential inheritance tax bill. As long as the policy is written into a trust, the proceeds do not count as part of your estate. Upon death, the policy pays the trust which contributes to all or part of the inheritance tax bill. Discounted gift trusts are designed for people who want to gift money to a trust but draw a regular income for the rest of their lives. Whatever remains in the trust after death will pass onto any beneficiaries free of inheritance tax.<\/p>\n The trust works by purchasing an investment bond. This provides a tax efficient income of up to 5% until your death and should you live for seven years, the bond does not count as part of your estate.\u201cVoluntary Tax\u201d<\/h3>\n
1:Write a will<\/h4>\n
2:Lifetime gifts<\/h4>\n
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3:Home ownership<\/h4>\n
4:Pensions<\/h4>\n
\n[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n5:Trusts<\/h4>\n
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\n[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n6:Life assurance<\/h4>\n
\n[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n7: Discounted gift trusts<\/h4>\n
\n[\/vc_column_text][tm_spacer size=”lg:40″][vc_column_text]<\/p>\n8:Further planning<\/h4>\n