Avoiding IHT by writing will

Beckipeg

Half share of house worth around £250K (other half owned by daughter who may wish to move in), savings in various funds worth around £200K. With IHT allowance of £285K that leaves £165K liable to IHT?

How do I protect this from being eaten up by tax? Have spoken with solicitor who suggests a Family Trust for the benefit of the next and any subsequent generations. He also suggests putting the whole value of the property into the trust to pass on the IHT benefit down the generations - is this good advice?

rayfuzz

Didn't Mr Brown include some money grabbing from trusts in the last budget, don't know the details but I thought most trust solicitors were still reading the small print to work out exactly how they stood. May be worth a question to your solicitor.

bristol_pilot

Trusts can be a good way to avoid IHT, but you must consult a specialist solicitor. The whole area is up in the air at the moment, so they may be rather busy.

Another good way to avoid IHT is to give a large fraction of your money to your relatives during your lifetime. I think there will be no IHT to pay provided you live another 7 years. However, if you will continue to have use of the asset (a house, say) after it's given away then you will need to consult a solicitor first to ensure that you comply with all the conditions necessary to avoid IHT.

You can also take out a life insurance policy that will pay out on your death to meet any IHT liability - see a financial advisor.

LOST

Living in a house you have gifted away is a gift with reservation for IHT purposes - this must be confirmed by a specialist solicitor

Tiggs_2

lots of options, you need to see an adviser that knows his IHT. and anyone still saying they dont know whats going on because of the rule changes is not keeping up to date - aside from being made law theres not a lot left for the finance act so every knows the details by now (at least they should do well enough to explain the likley implications)

Your main issue is if you can get the half house out the estate - if your kid owns half but lives elsewhere you'll have a job suggesting thats not a gift with reservation. Your capital assets are easier to deal with and, depending on your needs, you could consider various schemes like Loan Trusts/ Discounted Gift Trusts as ways to hold the money in an IHT effeceint way (and both those schemes are fine post budget)

or if you are lazy (or your adviser is!) you can insure against it.....not my favorite option. I meet too many advisers that claim "IHT EXPERT" then try and flog life assurance!