Wills and Inheritance tax mitigation
These two subjects are interlinked in a few ways. Making a will is relatively cheap and if written correctly, can ensure that your assets are passed to your intended beneficiaries, rather than being distributed to other individuals by default in accordance to the intestacy rules (ie dying without having made a will)
The statutory legacy where an individual dies intestate in England and Wales was announced effective from 14 May 2014, as shown below.
The statutory legacy is the amount which an individual is entitled to receive from
the estate of their husband, wife or civil partner where the deceased individual has not made a Will.
Married person with children
The surviving spouse is entitled to: The first £250,000 (with interest until payment);
The personal chattels; and HALF of the remaining estate absolutely.
The other half of the remaining estate passes to the children immediately, or is held in trust for them until age 18.
Married person without children
The surviving spouse is entitled to: The personal chattels and the entire estate.
Single person with children
All of the net estate is divided equally between the children.
Single person without children
All estate to parents.
If none, all to brothers, sisters and children of deceased brothers and sisters.
If none, all to half brothers, sisters and children of deceased half brothers and sisters.
If none, all to grandparents.
If none, all to uncles and aunts and children of deceased uncles and aunts.
If none, all to half uncles and aunts and children of deceased half uncles and aunts.
If none, all to the Crown
Regarding inheritance tax, how do you feel about the prospect of a large chunk of your hard earned money of inheritance being taken by the chancellor of the exchequer? We advise on a myriad of ways to eliminate or significantly reduce this tax. The starting point is calculating the tax due on your estate. If your net worldwide assets (including your residential property) total more than £325,000, there could be 40% tax to pay on any values in excess of this figure. Married couples can both use their allowances and on first death, any unused allowance by the deceased in his or her lifetime, can be transferred to the survivor.
Mitigation strategies involve;
- Gifting money away to family and surviving 7 years can move the value of such gifts out of your estate after this period
- Use of the small gift exemptions to remove cash from your estate immediately
- Distribution of unused income to family to remove such values from the estate immediately
- Investing capital into qualifying inheritance tax investment products in order to remove these amounts from the estate from day 1, 2 years or 7 years.
- Insuring the tax debt by taking out a simple term or whole of life policy to cover the amount of the tax liability.