Inheritance Tax Planning

Inheritance Tax

It is often said that inheritance tax is voluntary and only payable by people who have not planned ahead to reduce the amount that their family will have to pay. Everything over a certain limit set by the government each year is liable for a 40% tax charge, to be paid up front before the estate can bechildren divided.

A case scenario Paul and Paula are a married couple who own their own home worth £370,000. Paul has life insurance worth £170,000 and Paula also has life insurance worth £170,000. They wish to leave everything to each other and then to their . The total value of the estate means that even taking into account the transfer of the nil rate band on first death, an inheritance liability of £17,200 is created on the first death. Having paid the £17,200 on first death, on second death an additional Inheritance Tax Liability of £27,520 (Financial Year 2008/09) will also be left on the estate.

By changing ownership of their home to Tenants-in-Common and using Inheritance Tax saving Wills, incorporating Discretionary Trusts, all of the Inheritance Tax on the second death can be mitigated. An unmarried couples Inheritance Tax liability in this situation will be considerably higher as they cannot transfer the nil rate band on first death.

Please phone either John or Monica on 01983 616 156 or email your enquiry via the contact form below.

We are sometimes away from the office visiting clients so should we not answer, do please leave a message and we will get back to you.

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