Inheritance Tax Tips.

Retired_Minky

My quick and easy tips regarding inheritance tax. Anyone got any to add?
1) Put all life insurance policies in trust. These then don't form part of your estate. This doesn't usually cost anything to do.
2) If your estate is over £1m then use a trust. 
3) However if you have kids don't put your residential property in a trust as this has it's own allowance. 
4) Ensure the trustees are aware that the recipients of the trust are to take any money out of the trust as interest free loans rather than withdrawals. That will stop the trust money becoming part of their estate. e.g. if you give the money to your son. Let's say he gets divorced. This way his ex-partner won't be entitled to these funds as they're essentially a loan.
5) If giving to a charity in your will give them a fixed amount and don't give them a percentage of your estate. If it's a fixed amount the charity will take the cheque and walk (so to speak). If it's a percentage certain charities will be very aggressive to ensure they maximise the return from your estate which could in turn delay payout to your family members.
6) Create a schedule of your gifts made over the last 7 years and keep it up to date. Also record if these gifts are PET's (potential exempt transfers) or CLT's (chargeable life transfers). Ideally download inheritance tax form 403 from the HMRC website as this will allow you to record this in the right format
https://www.gov.uk/government/publications/inheritance-tax-gifts-and-other-transfers-of-value-iht403

Jeremy535897

Be aware Courts can overturn trust arrangements in divorce proceedings of beneficiaries.

xxxxxxxx

MSE's IHT page 
https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht/
Says trusts can now be taxed.

Jeremy535897

xxxxxxxx said:

MSE's IHT page 
https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht/
Says trusts can now be taxed.

Discretionary trusts always were subject to inheritance tax, but the comparative IHT regimes of individual and trust ownership vary over time.

Linton

One aspect of giving to charity in your will is not often mentioned:
If you leave at least 10% of your estate to charity, the IHT rate is reduced to 36%.  This is in addition to the charitable gift itself not being taxed.  So if you were planning say on a 8% gift it could be to your beneficiaries advantage if you made it 10% instead.