There are many benefits to making a Will. By doing so, you can ensure that there are clear instructions in place setting out what you wish to happen to your money, property and possessions after you are gone. A Will can also be used to effectively plan for Inheritance Tax (IHT) so that as much of your Estate as possible is passed on to the people and causes that are most important to you. The Inheritance Tax planning and Lifetime Giving Lawyers at The Sethi Partnership Solicitors can guide you through this process, offering straightforward, practical advice on reducing your liability for IHT.
IHT is paid on the assets that make up your Estate when you die – any IHT owed must be paid before Probate [LINK TO NEW PAGE] will be granted, and your assets can be distributed amongst your Beneficiaries. For the purposes of IHT, your Estate comprises of:
- Your home and any other properties you own, including the contents
- Money held in bank accounts, building societies or savings accounts
- Your possessions such as jewellery, artwork, tools & collectors’ items
- Investments and Shares
- Any sums that will be paid out under an insurance policy
There is usually no IHT to pay if either:
- The value of your Estate is below the £325,000 threshold
- You leave everything above the £325,000 threshold to your spouse/ civil partner, a charity or a community amateur sports club
Many legitimate steps can be taken to minimise the amount of IHT that will be owed by your Estate when you die. Our experienced IHT Planning Solicitors will take the time to meet with you and discuss your circumstances in detail to identify the best options for you to ensure that your liability for IHT is reduced as far as possible. We can advise on:
- Planning for IHT through your Will
- Creating and using trusts to minimise liability for IHT
- Preparing for IHT through Lifetime Giving
- Arranging your affairs to utilise tax reliefs
- Deeds of Variation
Lifetime Giving, also known as Lifetime Gifting, involves the passing on or disposing of assets during your lifetime in order to reduce liability for IHT. Lifetime Gifts must be thoroughly investigated by the Executor of the Estate to calculate IHT and be reported to HM Revenue & Customs to avoid penalties. As such, it is advisable to instruct an Estate Planning [LINK TO NEW PAGE] Solicitor for guidance in ensuring that the strict rules relating to lifetime giving are adhered to. There are two types of lifetime gift:
For a gift to be a PET, the deceased must have survived for seven years after making the gift and have received no benefit from it. If this is the case, no IHT will be due, regardless of the value of the gift.
These are assets that have been given away at any time, but the deceased continued to receive income from it or a benefit of another kind. In this case, the asset must be valued at the time of death, and the seven year rule does not apply.