Start planning today to spare your family from a potential Inheritance Tax bill tomorrow

1. The main ways to avoid Inheritance Tax are to spend your money while you are alive or give it away.

Inheritance Tax matters

Inheritance Tax was introduced in the UK in 1796 and stemmed from the influence of the French Revolution. The concept of IHT was supposed to protect poorer members of society and interrupt the legacy of inherited wealth.

Reducing your beneficiaries’ potential Inheritance Tax bill – or mitigating it out altogether With careful planning and professional financial advice, it is possible to take preventative action to either reduce your beneficiaries’ potential Inheritance Tax bill or mitigate it out altogether.

How much Inheritance Tax could you potentially have to pay?

To estimate how much Inheritance Tax you may have to pay, add up the value of all your wealth, subtract your liabilities and the £325,000 nil rate band allowance, and then multiply the remainder by 40%.

Arriving at the amount of Inheritance Tax payable

To arrive at the amount of Inheritance Tax potentially payable when valuing your estate, you need to include assets (property, possessions, investments and money) you own and certain assets you have given away during the last seven years. The valuation must accurately reflect what those assets would reasonably receive in the current open market.

The later you leave it, the more limited your options will be

Successful planning is dependent on getting the foundations right, and it is most effective when it is conducted early. The later you leave it, the more limited your options will be. Current rules mean that the survivor of a marriage or registered civil partnership can benefit from up to double the Inheritance Tax threshold – 650,000 in the current tax year, in addition to the entitlement to the full spouse relief.

Is it time to evaluate your estate?

We can help you evaluate the size of your estate—which could include assets such as property, pensions, shares and personal property—and identify the opportunities that will help you avoid or reduce the amount of Inheritance Tax your family will have to pay on your estate and enable you to preserve wealth for your dependants if the worst comes to the worst.

Funding a potential Inheritance Tax liability

After taking the appropriate steps to put in place an Inheritance Tax planning strategy, if there is still the potential likelihood of a liability on your estate or if you have made gifts which have created a potential liability for the recipients if you die within seven years, we can help you review how you could fund this liability in the most efficient way.

Managing wealth

We can advise you on a range of different trust solutions, each designed with a particular purpose in mind.

Helping you control and protect your assets

One of the most effective ways you can manage your estate planning is through setting up a trust. The structures into which you can transfer your assets can have lasting consequences for you and your family, so it is important that you obtain professional advice as the right structures can protect assets and give your family lasting benefits.

Getting the full benefit

A gift with reservation is a gift that is not fully given away. Where gifts with reservation were made on or after 18 March 1986, you can include the assets as part of your estate, but there is no seven-year limit as there is for outright gifts. A gift may begin as a gift with reservation, but some time later the reservation may cease.

Passing on parts of your estate

There are some important exemptions that allow you to legally pass your estate on to others, both before and after your death, without it being subject to Inheritance Tax.

Sharing out your estate

Planning your finances in advance should help you ensure that when you die, everything you own goes where you want it to. Making a Will is the first step in ensuring that your estate is shared out exactly as you want it to be.

Families are feeling the impact of benefit cuts

The cost of bringing up a child has reached £227,266, up from £222,458 last year, with the first year of a child’s life seeing the largest increase.

You need to act fast to avoid next year’s child benefit charges

Families impacted by the high income child benefit charge need to act now to limit or avoid it in the next tax year. Doing this could make them potentially up to £2,449 better off, but they only have until the 6th April 2014 to take some vital steps for the 2013/14 tax year, according to Standard Life.