Thinking about your own death can be difficult. And planning for the end of your life is a very sensitive and personal experience.
However, if you want to make life easier for those you love it makes sense to try and make sure your family keeps as much of the wealth you have created as possible.
But many people never actually get around to organising their affairs so that the Inheritance Tax liability on their estate is minimised, even though substantial sums can be saved by taking some relatively simple actions.
Last year the Government gathered a record £4.9 billion in Inheritance Tax – 4% up on 2015-16. HMRC say that most of the increase was due to rising house prices and strong stock markets.
The current rules mean that on your death the value of your estate must be calculated.
This might include taking into account any property or business you own, investments, cash at the bank, vehicles and life insurance policy pay-outs not in trust
If your estate is valued at £325,000 or less there is no tax to pay.
If your assets total more than that, Inheritance Tax of 40 per cent is due on everything above £325,000.
Of course, it’s not as simple and straightforward as that.
To begin with married couples and registered civil partners can combine their allowance – effectively allowing estates of up to £650,000 to be passed on tax free.
And it doesn’t matter if one partner dies before the other.
The estate passes tax free to the surviving person along with their “nil-rate allowance”.
On top of that, a new Residential Nil Rate Band (RNRB) has been introduced this year that can be used against your main residence and sits on top of the existing allowance.
It is being phased in, but starts at £100,000 – effectively providing a tax-free allowance of £425,000 per person in 2017-18.
We will discuss the RNRB in greater detail in our next article.
However, our estate planning experts are available now if you would like to discuss how we can help you.
To get in touch you can call us on 01243 532161 or email firstname.lastname@example.org.
Don’t miss out on all the latest breaking news where you live.
Here are four ways you can be sure you’ll be amongst the first to know what’s going on.
1) Make our website your homepage
2) Like our Facebook page
3) Follow us on Twitter
4) Register with us by clicking on ‘sign in’ (top right corner). You can then receive our daily newsletter AND add your point of view to stories that you read here.
And do share with your family and friends - so they don’t miss out!
Always the first with your local news.
Be part of it.