MANY people put off making their wills and arranging their affairs in order to minimise the amount of Inheritance Tax their children might have to pay in the future, because it seems complicated, intimidating and because they don’t want to think about it.
However, if you intend to leave a house and other assets to your children and family it’s vitally important to plan in advance.
Whatever careful planning you choose to make cannot be completed without making a robust and valid will, according to The Nottingham Building Society.
There are many ways to organise your affairs and various steps to consider, but expert advice should always be sought.
The starting point is to assess how much your assets are worth (such as your house, life insurance, contents, cars, savings, investments, pensions and much more besides) and then calculate the current Inheritance Tax liability.
You may be surprised as to how much this all adds up to. You then consider many options, some of which may include;
Giving away (making a gift) some of your wealth to your family, friends or charities, but be careful! There are very strict limits that define what you can, or cannot do without causing an unnecessary tax burden for your family.
Be very careful if you wish to consider giving away all or part of your home to your family whilst you continue to live there.
There are many potential pitfalls in doing so and there may be other solutions that may be more appropriate for you to consider.
It may be possible to form one or more of various types of ‘Trust’ which allow you to place your money or other assets outside of your estate in order to reduce the burden on your family.
There are also many other advantages of arranging specific ‘Trusts’ or even considering forming a ‘Pilot Trust’ which can be used to skip generations and may help avoid paying unnecessary tax.
Generally, assets held in discretionary trusts are not subject to the delays, costs, trouble and stress associated with obtaining probate after someone has died.
Financial planning may involve the purchase of a ‘Purchased Life Annuity’ or ‘Lifetime Mortgage’ to provide you with a lump sum or tax efficient income whilst potentially reducing any Inheritance Tax burden. There are many other ways in which expert financial planning may help.
It is also possible to rearrange the affairs of someone who has already died so that their estate is more tax efficient, but this must be done within two years and have the consent of all of the original beneficiaries of the Will.
Tom Gormanly, from The Will Writing Company, says: “Many people fail to realise just how much money, time and effort can be saved by getting some professional estate and tax planning advice.
“However, to be honest, it can be a bit daunting and the best advice we can give is to speak to an independent inheritance tax adviser and an estate planning consultant.
“We realise how difficult it can be to find this advice from one source which is why we are so pleased to partner Nottingham Building Society in this complex area”.
l For further advice call into one of The Nottingham’s branches or alternatively you can email us at email@example.com.