When writing a financial plan for a client Nicholls Stevens will always take into account the affects of inheritance tax upon the ability of the client to pass on capital to the next generations. Some Inheritance Tax planning will involve us working closely with the client’ solicitor or other legal advisers.
Sometimes Insurance Companies devise plans which are said to solve the IHT problem of the client. Some of these plans are geared more to the sale of a product rather than to bespoke IHT planning. We always advise that clients should seek legal advice. If they wish to consider a Discounted gift Scheme or Gift and Loan Scheme offered by an Insurance Company it is always a good idea, and money well spent to discuss this with a Solicitor before you set it up. This costs a lot less money than the situation when the scheme is challenged by the Revenue after death.
If you are concerned about the payment of Inheritance Tax on your death you need to consider the following
The value of your estate and whether Inheritance Tax will be paid
Some people are worried unnecessarily. It is fairly common for husband and wife to leave all their assets to the survivor, so IHT does not become payable until the second death. At this point it is likely that it will be possible for the Executors to claim the nil rate band for the deceased plus a further nil rate band for the deceased’s spouse
The terms of your will – it may need reviewing
It is always a good idea to review your will from time to time
You may be able to reduce your estate for IHT purposes by making gifts.
You can make:
- Annual gifts
- Small gifts
- Gifts out of normal expenditure
- Larger gifts – so long as you survive 7 years
If you are making any gifts do remember to keep a detailed list of every transaction, this may be very useful for your Executors in due course