Inheritance & Estate Planning
Our team of experienced inheritance and estate planning solicitors can help you make the most of your estate and minimise the tax to be paid.
Making provision for your loved ones after you have gone is an essential part of managing your estate and assets. Planning and expert legal advice is essential to ensure that the inheritance tax due from your estate is minimised – particularly if you own a business or overseas assets.
We can help you take advantage of the complexities of IHT reliefs and exemptions to maximise the amount you pass onto the next generation.
If you would like to discuss your circumstances or requirements with one of our experienced inheritance tax planning lawyers please call us on 0118 947 8638 email email@example.com or complete our Online Enquiry Form to arrange a free, no-obligation discussion.
How Can We Assist You ?
- Inheritance tax planning and estate planning
- Transferring your tax-free allowances to your wife, husband or civil partner
- Filing inheritance tax returns
- Will drafting
- Lifetime gifts and potentially exempt transfers
- Charity donations
What is inheritance tax?
Inheritance tax (IHT) is the tax due on your assets (including property, possessions, and any other financial assets) when you die. IHT can also apply to gifts made during your lifetime or your life interest or right to income in certain types of trusts
Is IHT charged on everything?
Some assets (such as business interests, agricultural property and some types of investments) benefit from reliefs and allowances which mean they are not subject to IHT.
Some of your successors (such a spouses and civil partners) are exempt from IHT when they receive assets outright, or in the case of spouses and civil partners in certain types of trust. There are also ‘nil-rate allowances’ and the estate within those allowances passes free of tax on death.
We can help you make the most of these reliefs and allowances and ensure that your successors can benefit from as much of your estate as possible.
What are the nil-rate allowances?
The first £325,000 of your estate is passed on tax free. This allowance is called the Nil Rate Band (“NRB”). If your estate is worth less than this, it pays no IHT at all.
The NRB is reduced by the value of substantial gifts made in the 7 years prior to death. Where the value of gifts made in the 7 years prior to death exceeds £325,000 the gifts in excess of the NRB are subject to tax following death.
Another allowance is the ‘Residential Nil Rate Band” (“RNRB”) which is currently £175,000 and is available if you own a property which you pass to direct descendants, such as children, grandchildren, spouses and civil partners.
You can transfer your unused tax free allowance to your spouse or civil partner if not all of it is used by your estate. The transfer of the allowance can only be applied for on the death of the surviving spouse or civil partner so it is important for appropriate records to be kept to ensure the unused allowance can be claimed.
Any unused RNRB can be transferred to a person’s surviving spouse or civil partner in the same way that the NRB can.
Our inheritance tax planning solicitors can ensure that you are using all your available Nil-Rate allowances whilst leaving your estate to your chosen beneficiaries.
Who pays the inheritance tax?
Inheritance tax due on death from estate assets must be paid by the Executors from the estate.
Executors must prepare and submit an inheritance tax account and make arrangements for the tax due to be paid prior to obtaining a Grant of Probate to deal with your estate.
Our lawyers can advise you how much tax would currently be due from your estate and approximately how much will need to be paid before a Grant of Probate can be obtained so you can ensure that your Executors will be able to arrange payment of that tax from your assets.
Inheritance tax due from lifetime gifts exceeding the Nil-Rate allowance is usually payable by the recipients of those gifts. If you prefer for this tax to be paid from your estate, we can advise you on this point, so that your Will makes the appropriate provisions.
Can I make gifts during my lifetime without paying IHT?
If you make outright gifts (of money, items, property, land etc) during your lifetime those gifts are not subject to IHT when they are made and are potentially exempt transfers (PETS).
The good news is that if you live for 7 years after making an outright gift it is not subject to IHT.
For gifts made in the 7 years prior to your death they will be considered in calculating the tax due on your death. If their value exceeds the nil-rate allowance the gifts more than the allowance will be subject to tax on your death, subject to a sliding scale which reduces the rate of tax due if 3 years have passed since the gift was made.
For something to be a gift, you must fully part with it. If you give away an asset (such as a house) but then continue to use it or benefit from it (i.e. live it in or receive rental income from it), HMRC will still take the asset into account in calculating the IHT due on your death – even if you no longer own it.
Gifts into Trust may be subject to IHT during your lifetime. If gifts into Trusts do not exceed the nil-rate allowance in any 7 year period they will not be taxed during your lifetime but they will be brought into account on your death in the same way as outright gifts. If you gift more than the nil-rate allowance into Trusts in any 7 year period there is an IHT charge. If you die within 7 years there is a further IHT charge following your death.
Outright lifetime gifts to exempt beneficiaries (charities, spouses and civil partners) are not subject to IHT.
There are some gift allowances which can be utilised which include the following:
You are allowed to make one IHT-free gift of up to £3000 per tax year. This sum can be given to one person or shared between as many people as you choose. This allowance can be carried forward one tax year so if you do not use the allowance one year you can gift £6,000 the following year.
Small gifts exemption
You can make small gifts of up to £250 per year to as many recipients as you like. These cannot be the people who have received a gift made using your annual exemption. As long as you do not give one person more than £250, you can distribute as much cash as you wish and can continue to do so every year.
Wedding or civil partnership gifts
If a friend or relative is getting married or entering into a civil partnership, you are allowed to give them an IHT-free gift. The specific amount you are allowed to give without incurring IHT changes depending on your relationship to the recipient: if they are your child, you can give up to £5000; your grandchild or great-grandchild, £2500; and anyone else you can gift £1000 IHT-free.
Gifts out of income exemption
If you make gifts regularly (for example monthly or annually) to one person, they can be exempt from IHT if they come from your regular surplus income. This does not have to mean your wage but can also mean your pension, dividends, or interest from investments or savings accounts. As long as the gift does not affect your lifestyle and is made from income and not capital, it can be made free from IHT.
Our lawyers can advise you how to calculate your excess income and what records HMRC will require for this exemption to be claimed.
The importance of having an up-to-date Will
Preparing a Will gives you peace of mind and ensures all your affairs are in order – including matters relating to inheritance. Creating a Will is an excellent start, but you should also take time to keep your Will maintained and up to date. By doing so, you can ensure any recently gained assets, such as property, money, and personal belongings, are included in your Will. A valid and up-to-date Will can also make the probate process more manageable, ensuring all inheritance taxes and other fees are paid on time with no confusion and added stress.
Do I need to instruct inheritance tax planning solicitors?
Inheritance tax is a changing and complex area of law. Our experienced inheritance tax planning solicitors can help you ensure that everything is on the right track for you and your loved ones. Our team of legal experts at Caversham Solicitors Limited have the knowledge and expertise to support you and ensure you don’t fall into any traps. We can give you peace of mind.
To find out exactly how inheritance tax will affect you and how best to make IHT-free gifts to minimise this impact, you should talk to a solicitor with experience in trust laws and tax exemptions.
We can help you arrange your affairs tax-efficiently with a comprehensive and knowledgeable service, drawing on our expertise in property law and estates administration.
How much will it cost ?
The fees charged will vary depending on the complexity of your estate, the guidance you are looking for, and any other additional services you need in addition to your Will.
Our specialist team at Caversham Solicitors Limited will provide you with a quote based on your goals and requirements after an initial meeting.
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