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Inheritance Tax (IHT) - Some of the Options

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Most of our clients prefer to avoid, or reduce, the IHT bill on their estates. Quite understandably, they would rather see their family benefit than the Chancellor. There are a number of ways to deal with the IHT liability. They tend to be variations on the following basic themes.

1. Pay the tax – or, more accurately, let your beneficiaries pay the tax !

2. Stop further wealth coming into your estate if it will add to your tax burden.

a. Could an inheritance add to your own IHT bill? Have it redirected into trusts or directly to other beneficiaries. This can be achieved by a post death Deed of Variation or by asking the testator to vary the terms of the Will during their lifetime.
b. Could your estate be inflated by death benefits from life insurance or pension schemes? Assign the death benefits to other beneficiaries – directly or in trust.

3. Reduce the value of your estate if you can afford to do so.
a. Spend – 40% discount on everything !
b. Give assets away – if you survive the gift by 7 years, it will be outside your estate for IHT purposes

4. If you need to retain access to wealth …
a. … put future investment returns (income and growth) outside your estate – use a ‘gift and loan’ trust.
b. … reinvest into assets offering some relief from IHT such as investments qualifying for Business Property Relief.

5. If you already hold assets offering some relief – such a Business or Agricultural Property Relief – think carefully about the IHT implications before taking any steps that might lead to a loss of relief.
a. If you sell Business Property, consider reinvestment into other qualifying assets. ( It is also important to consider the impact of Capital Gains Tax. Again, there are ways to postpone, or eliminate, that tax liability.)
b. If your business holds investment assets, consider whether the current structure maximises the benefit of available IHT reliefs.
c. For our farming clients, it will be important to consider how changes within the family and the business could impact on IHT relief for the farmhouse as well as the land and agricultural buildings.

Why not give yourself some peace of mind?

Call us now to arrange a review of your IHT and estate planning ! Our legal experts and our financial planning experts are here to help you.

SWLaw Solicitors Ltd 01752 205202
SWLaw Investment & Financial Planning Ltd 01752 205205