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Frequently asked questions about Wills, Trusts and Inheritance Tax

Below are some of the questions clients ask our team. Click on the questions to find out more.

 

Why should I make a will?

 

Is making a will complicated and expensive?

 

What is inheritance tax and how can I reduce the amount payable on my estate?

 

When should I make a will?

 

Can I change my will, and how often should I review it?

 

What are the main tax benefits of setting up a trust?

 

Who should I appoint as trustees?

 

How long should the trust last for?

 

How are trusts taxed?

 

What is the threshold for Inheritance Tax?

 

Are there any exemptions from Inheritance Tax?

There are a number of exemptions, and potential exemptions, from Inheritance Tax.

Gifts given either in your will, or during your lifetime, to the following are exempt:

 

  • Your wife, husband or civil partner - n.b. if you are not married to your partner gifts given to them will not be exempt
  • Charities and UK political parties
  • Some national institutions

 

Other gifts, such as wedding and civil partnership gifts are exempt as long as they are given on or just before the date of the wedding/civil partnership ceremony and are within certain limits dependent on your relationship to the couple getting married/entering into a civil partnership.

 

There are also exemptions for some other one-off gifts to individuals, and for gifts you make habitually, like birthday and Christmas gifts. Maintenance payments to your husband or wife, your children (if they are under 18 and in full time education), any other elderly or infirm dependent relative or an ex-spouse are also exempt. In addition to these exemptions, there is an annual exemption allowance.

 

Other gifts you make within your lifetime are classed as 'potentially exempt transfers', and will be liable for Inheritance Tax if you do not survive for seven years after making the gift. These gifts must also be given outright - that is you must not retain any benefit from them.

 

 

Can I reduce my Inheritance Tax liability by giving family members their inheritance before I die?

 

My partner and I are not married - how can we reduce our inheritance tax liability?