Estate Planning and Mitigation
The Importance of Estate planning and inheritance tax
Estate Planning and Inheritance tax planning used to be an activity confined to the very rich.
However here at Iain Longworth Partnership we find that this is no longer the case. Families and individuals with a moderate level of wealth now need to plan ahead to ensure that their assets are passed on to their loved ones as tax efficiently as possible.
Estate Planning and inheritance tax mitigation is only one of the factors that you need to consider when looking into passing on your estate to loved ones. Iain Longworth Partnership defines Estate planning as passing your estate to the people that matter to you in the most tax efficient way.
Estate planning options
Inheritance Tax tips for minimising liability
It is worth considering when Inheritance Tax actually applies. Every person has a tax free allowance of £325,000 which is also known as the nil rate band. Inheritance Tax only applies to the value of the estate above this at a rate of 40% on death.
Transfers between husband and wife are exempt from Inheritance Tax and if the nil rate band is not used on the first death the value of the estate on the second death that will be exempt from Inheritance Tax doubles to £650,000.
You can give away up to £3,000 a year, which is known as your annual allowance. This will be immediately exempt from Inheritance Tax . There is also a small gift exemption, meaning you can give up to £250 to as many people as you like.
You can also gift in other ways to keep your liability down such as making wedding gifts up to £5,000 for parents and donations to qualifying charities.
Probate is the term which is commonly used when we talk about applying for the right to deal with a deceased person’s affairs also called administering the estate.
We use different terms depending on if the deceased person left a will and where they lived.
A grant of probate is needed when the person who dies leaves one or more of the following:
£10,000 or more, stocks or shares, certain insurance policies or property or land held in their own name.