Inheritance Tax Planning

sneekymum

Mumstheword wrote:

Do you mean trusts whereby a sole remaining parent puts assets in trust whilst they are still alive? So the 7yr rule applies?

Yes.

Otherwise no one would ever pay IHT.

A trust is not a magic cure all.

Trusts are useful to keep money safe for childre. But then why not just open accounts for them and not tell them about it...

Robert_Sterling_3

sneekymum wrote:

Its an odd system that prevents us from caring for our own families as is the norm in the rest of the world.

The system does not prevent you caring for your parents

twins_2_Be

Hi Everyone

I've read all of the posts, just spent the last two hours scrolling!!

I have not read an answer to our issue.

We have one year old twins and we need to think about inheritance tax planning.

I called someone today mentioned on taxation web and it costed about £1,300 for inheritance tax planning. It's sounds a lot. If we both die we want to make sure as much gets to the babies as possible:

We have a house worth £330 (no mortgage)
Savings and shares worth £300
Life insurance for £500 (250 for each me and husband)

I think that we can each get the 275k allowance. How can we plan so that as much money as possible gets to the babies?

Also, does anyone know if this is enough money to bring up two kids from age 1?

Thank so much.

I don't mind paying for some tax planning advice, but I would like to know my options.

Regards

Twin Mum

sneekymum

Not really a great big problem here

- if you make use of the Nil-rate-band allowance for your house and savings (by not wasting the allowance in your will) and make sure your life insurance is written in trust to the benefit of your children and not the surviving spouse. With £300K savings the surviving spouse will probably be fine without the benefit of that policy payout in the event of widowhood...

The tax-free allowance are set to rise over the next few years anyway. Meanwhile you can make reductions in your taxable assets by taking out pensions - with your children as beneficiaries should you die before cashing them in.

£1300 for IHT Planning? - "time for a new career" says Sneekymum - I'm nothing financial so don't rely on a word I say... :rotfl:

fagun

This may already have been answered but haven't found it so far.

My main asset is a house (worth more that £263k). I want to leave the Nil rate band amount (£263k currently) to my kid(s), and the rest to my wife. Obviously I don't want to have to write a new will each year as the banding changes. Can I use wording like this in the will?

"I leave my children assets to the value of the remaining nil rate band after any potentially exempt transfers."

Thanks in advance

whiteflag_3

Meanwhile you can make reductions in your taxable assets by taking out pensions - with your children as beneficiaries should you die before cashing them in.

Sneekymum are you sure there would be no IHT with this course of action( on the pensions I mean)?

dunstonh

Off the top of my head, the 7 year rule would apply to the pension contribution as far as a single premium goes. However a regular contribution wouldnt suffer the 7 year rule due to the different way they are treated.

reddevilled

fagun wrote:

This may already have been answered but haven't found it so far.

My main asset is a house (worth more that £263k). I want to leave the Nil rate band amount (£263k currently) to my kid(s), and the rest to my wife. Obviously I don't want to have to write a new will each year as the banding changes. Can I use wording like this in the will?

"I leave my children assets to the value of the remaining nil rate band after any potentially exempt transfers."

Thanks in advance

In order to do this you would have to create what is commonly called a "nil-rate discretionary trust". If you speak to your solicitor about drafting a will then a well worded will will last you many many years as opposed to having to change it every year.

sneekymum

fagun wrote:

This may already have been answered but haven't found it so far.

My main asset is a house (worth more that £263k). I want to leave the Nil rate band amount (£263k currently) to my kid(s), and the rest to my wife. Obviously I don't want to have to write a new will each year as the banding changes. Can I use wording like this in the will?

"I leave my children assets to the value of the remaining nil rate band after any potentially exempt transfers."

Thanks in advance

Dunno - ask a solicitor - (I bet they don't hang about on here all day...)

fagun

sneekymum wrote:

Meanwhile you can make reductions in your taxable assets by taking out pensions - with your children as beneficiaries should you die before cashing them in.

whiteflag wrote:

Sneekymum are you sure there would be no IHT with this course of action( on the pensions I mean)?

Depends what you mean by getting a pension with kids as beneficiary.

If the pension is in their names, then may be laible to IHT.

If it's in your name, most pension are administered in trust. You fill in a "Expression of Wishes" to the trustees stating your preferred beneficiaries. The trustees retain "discretion" on who benefits from your pension if you die before it pays out - hence no IHT to pay