Inheritance Tax Planning

Robert_Sterling_3

In your "Mirror Wills" you each have a statement along these lines but couched in special legalese language:-

I leave everything to my wife/husband if he/she survives me by at least 30 days otherwise I leave everything to my children.


Tis is neither Legal nor financial advice  ...  just a nod in the right direction perhaps.

P.S. If it is not known who died first the in law the elder peron is assumed to have died first.

P.P.S. If you die simultaneously both will can be varied to achieve the use of two nil rate bands of exemptions of IHT.

chateauneufdupape

I found the following site on discretionary trust wills.

http://www.tenminutewill.co.uk/pdffiles/discretionary_trusts.pdf

And before anyone makes a comment, I have no interest in The Ten Minute Will Company.

fraser

I found the following site on discretionary trust wills.

http://www.tenminutewill.co.uk/pdffiles/discretionary_trusts.pdf

And before anyone makes a comment, I have no interest in The Ten Minute Will Company.

thanks for this I am a grandson looking in to the options open to my recently widowed grandmother, looks like the only option to us is the 2 year discretionary trust.

do the same rules apply to the levels of relief ? i.e. 7 years and no IHT will be liable ?

it appears this method uses both tax free allowances (2x£263k) and we would be liable for IHT on any remainder above that ?

chateauneufdupape

Fraser,

I am no expert, but I do recall reading somewhere recently (possibly a post on here) that a deceased person's will can be changed / contested within 2? years. If your grandfather's will gave all to your grandmother, it may be possible to change this to take advantage of the nil rate band. Maybe somebody with more knowledge could give further guidance.

chateauneufdupape

Also this previous thread may help.

Really helpful professional advice is available at the following link. You can download the guide for free. It also gives examples of how to avoid IHT.

http://www.bbtco.barclays.co.uk/trustee/06_1.html

Once you've got an understanding of the basics, if you decide you'd like a free appointment with their local Financial Planning Manager you can book this through 0845 601 3448.

Got me sorted in a flash ::)

radar_2

Hi, My partners father died a year ago and the estate has been settled up with money, shares and property being divided between her and her two brothers. Her dads estate had to pay IHT. Now some 2 months after the final settlement from the executors a letter turns up detailing an investment her dad had which is worth £7,000. They dont want to go through the solicitors again as they are pricey and also they are unsure about wether they are due to pay IHT on it, although it is likely. Anybody out there have any ideas?
Thanks

Slasher_2

I'm unfortunately still confused by this thread!

The Will of my parents leaves everything to each other in case of death, and to myself if both are dead. There estate is probably under the £263,000 limit, say £250,000.

If my dad died then my mum will inherit everything tax free. Then upon my mum's death I will have to pay the tax on the inheritance, leaving me with a tax bill of £100,000.

Is this correct?

JayS_3

No, Slasher

Your deceased parent's estate pays 40% tax on the amount of money that is left over after the threshold is deducted. In this link here http://money.msn.co.uk/tax/Insight/Basics/TaxBasics/AvoidingInheritanceTax/

it says the threshold is 250,000, therefore if your parent's estate is valuated at 263,000; they only pay 40% on 13,000. However, if my memory serves me the threshold is about to go up to about 263,000 or thereabouts. Hope this helps, the link may help too.

Best wishes
Jay

Slasher_2

Thanks for clearing that up, this appears to be such a difficult area but represents massive 'Money Saving' potential needing a lot of expertise. This subject deserves its own forum!

neilsue

Dear Martin

My father and mother have a joint estate of around £ 350,000 (of which £ 330,000 is the house value). We visited a solicitor yesterday with a view to putting the house in joint names and rewriting wills to bequeath each couples 50% share in their house to their children, thus mitigating IHT. The solicitor advised that this was no longer possible due to the revenue tightening up on this type of tax avoidance planning. We discussed with her various other options to reduce effectively the equity in the property. We would like your thoughts or any of the other online eqperts on such solutions as " equity release" plans and possible "mortgages" which could help reduce the equity, give my parents some well needed cash and successfully reduce the value of their estate to below IHT levels. Any advice would be appreciated.

Kind regards