Tax Efficiency with Wills and Trusts: Inheritance Tax Planning


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Help to reduce the amount of tax payable on your estate after your death

Inheritance tax was once something that only affected very wealthy people. However, the rapid rise in the property market in recent years has not been matched by a corresponding rise in the Inheritance Tax threshold. The threshold is currently just £325,000 – any assets above this level are taxed at 40%.Effectively, that means that if you own a family home and have accumulated additional assets through inheritance, savings and other investments, such as shares, a significant amount of the assets you leave behind after your death could be lost to tax.The good news is that with careful, sensible planning now, you can ensure that your loved ones gain the maximum possible benefit from your assets after your death. Our team can help you with a range of measures which will help you to reduce the amount of inheritance tax payable on your estate – depending on your circumstances, we may even be able to help you avoid inheritance tax altogether.

What kind of measures can be taken to avoid or reduce Inheritance Tax?

Below are three of the most common strategies that can be employed to reduce your Inheritance Tax liability. Any or all of these may be useful in your case. However, because everybody's circumstances are different, it is always wise to take expert legal advice specific to your situation.

Making a tax efficient will

If you wish to reduce the amount of inheritance your loved ones will lose to tax, making a tax efficient will is one of the most important things you can do. Assets passing to a spouse are exempt from Inheritance Tax. However on the death of the surviving spouse, Inheritance Tax may have to be paid. This can mean that your children or other loved ones could ultimately lose a high proportion of their inheritance to tax.

By each writing a discretionary trust into your wills to hold assets which may significantly increase in value faster than the threshold for Inheritance Tax, such as property, you could significantly reduce the amount of inheritance tax payable on the second spouse's death. Contact our Wills specialists to find out how we can help you make a tax efficient Will.

Creating a trust within your lifetime

If you have significant assets, you may be able to transfer some of them into a trust to be managed by trustees. Whilst there are Capital Gains and income tax implications, the Inheritance Tax savings could be significant, provided you survive for seven years after the transfer.

Making a gift within your lifetime

It is possible to give significant assets, for example your home or stocks and shares, away as gifts in order to reduce the amount of Inheritance Tax payable on your death. However, there are rules about this and so this is an option that should be considered very carefully before going ahead.In order for your tax liability to be reduced, you may also have to survive for seven years after the gift is made. Our team can explain the rules about gifts and help you to decide whether this is the best option for you.

Get Specialist Advice

Our Inheritance Tax Planning Solicitors are accredited members of the Society of Trusts and Estates Practitioners. This means their expertise has been rigorously assessed by this respected professional body. If you would like to discuss your options for reducing the inheritance tax paid on your estate, contact us to arrange your free consultation with a specialist solicitor. Call 0800 138 0458, or send us a message using our contact form and we'll call you back.

What our clients say…

The person who needed your services is disabled so we were provided with a prompt, efficient service in our own home.

Wills & Trusts Client

I have received a good service delivered with honesty, openess, respect and understanding.

Wills & Trusts Client

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