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Estate Preservation

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Estate Preservation is concerned with maximising the value that you are able to pass to your family or other chosen beneficiaries. This does not just mean protecting your estate from Inheritance Tax. 

You also may wish (eg)  to:

Protect your assets if you die and your spouse or partner subsequently remarries

Protect some assets to ensure they pass to your children or grandchildren

Reduce the impact of care costs

Points to Consider

The first and foremost consideration is your will.   Without this, your estate may not be distributed as you wish.  In this scenario the intestacy rules will apply and the destination of your estate is not under your own control !

Consider the use of trusts to give added protection to your beneficiaries and ensure that the value of your estate passes into the right hands.

Take some advice about possible ways to reduce the impact of Inheritance Tax.

Inheritance Tax  (IHT) – The Basics

Benjamin Franklin once said that “nothing is certain but death and taxes”

If you have assets approaching the threshold for Inheritance Tax (fixed at £325,000 until April 2014) then you may wish to consider obtaining  professional advice in relation to Inheritance Tax planning. The correct advice can save much more than it costs and ensure that those closest to you benefit as fully as possible from your estate on your death.  If is sometimes said that “Inheritance Tax is a voluntary tax” and indeed with careful planning the amount of tax that is payable after death can be significantly reduced or even avoided.

For UK domiciled individuals, Inheritance tax (IHT) is currently charged at 40% on the value of your estate in excess of £325,000.  For somebody who is non UK domiciled the threshold is reduced to £55,000.  Care is needed as somebody can be UK resident but not UK domiciled.  If in any doubt this point should be clarified. Proposals have been announced this week to freeze this limit to help fund the costs of long term care.

For  married couples and civil partners, any unused percentage of the available allowance from the estate of the first to die may be claimed when the second spouse dies. This effectively means that for a couple who are UK domiciled up to £650,000 can be left free of Inheritance Tax.

Inheritance tax is calculated on the value of the deceased’s net estate, i.e. the value of worldwide assets less any debts and other liabilities.

There are some important exemptions and reliefs from Inheritance Tax and those provide opportunities to reduce the burden of tax.  Certain gifts are exempt and with appropriate advice and careful planning those can be a means of passing on significant value without IHT becoming payable.

Certain assets benefit from specific reliefs such a Business Property Relief and Agricultural Property Relief.   For those who are not involved in farming, or in other businesses, these reliefs can still open up some investment opportunities which can lead to savings in IHT.

At SWLaw Solicitors and SWLaw Investment & Financial Planning,   we have extensive expertise in relation to advising on all of the above  matters. We can offer up to date knowledge delivered by our experienced and knowledgeable team and can ensure you receive the best advice for your circumstances.