Is inheritance tax affected by wills?

Gobsh

Is inheritance tax affected by wills?

My wife wants us to get a will to boost our inheritance tax for our son's benefit.

I can't imagine a will increasing tax entitlement?

mobileron

No but you certainly need a proper will.

Choirgrl

I expect your wife wants to minimise the tax paid rather than increase it. Depending on your circumstances and there may be things you can do to reduce the amount of inheritance tax that will eventually need to be paid - this could be through your will or through things you do before you die. As the previous poster says, having a proper Will in place is a good thing to do anyway, and will make it much easier for your son when the time comes.

p00hsticks

Gobsh said:

Is inheritance tax affected by wills?

Assuming we are talking England and Wales, then I think it can be,  depending on what the wills say - for an example, there is an addiitonal IHT allowance available if you leave your home to a direct descendant rather than the unrelated bloke next door, so there would potentially be more IHT due on the estate with a will specifying the latter than the former

But I imagine you are actually asking whether there is a difference in IHT between having a will or jsut relying on the intestacy rules (which would give your spouse everything up to £270,000 and half of anything above that, with the other half going to your son), and I don't think there would be.

But even if your will would tend to follow the normal intestacy rules then as mobileron says you should look at getting one set up, particularly if you have assets of more than £270,000 and you want to ensure that your spouse woudl be able to stay in the family home . And if you really are in IHT territory (i.e.assets over around £1 million) then I'd suggest that you really do need proper advice on how to handle your estate and the cost of getting a proper will drawn up by a solicitor woud be peanuts in comparison, and make life so much easier for whoever has to deal with things after your death.

Keep_pedalling

If you both died tomorrow what would be the value of your estates? A home owning couple can leave up to £1M IHT free to direct descendants through a combination of their nil rate bands (NRB) and residential NRBs.

If your joint assets are above that threshold, then you should be looking at taking professional advice.  

There are very good reasons why you should both have wills in place but saving IHT is not one of them. 

Sea_Shell

Keep_pedalling said:

If you both died tomorrow what would be the value of your estates? A home owning couple can leave up to £1M IHT free to direct descendants through a combination of their nil rate bands (NRB) and residential NRBs.

If your joint assets are above that threshold, then you should be looking at taking professional advice.  

There are very good reasons why you should both have wills in place but saving IHT is not one of them. 

By how much over does it start being worth getting professional advice?

Surely if you just squeak over, it's not going to be cost effective for a few £1000.

macman

Your will has no effect on the IHT that will be due, because a will is paid out of the residual estate left after debts are paid. IHT is a tax on the estate, not on the beneficiaries. You can't increase the amount your beneficiaries receive just by making a will.
If IHT is due then tax planning can reduce it, and making a suitable will would be one aspect of such planning.

getmore4less

A will can change tax due.

1m estate spouse and children

Will all goes to spouse no tax
Upto 1m nil rate band no tax second death.

Intestate child gets £365k uses up £325k nil rate band rest 40%

Marcon

macman said:

Your will has no effect on the IHT that will be due, because a will is paid out of the residual estate left after debts are paid. IHT is a tax on the estate, not on the beneficiaries. You can't increase the amount your beneficiaries receive just by making a will.
If IHT is due then tax planning can reduce it, and making a suitable will would be one aspect of such planning.

Could do if you leave a large slug to charity - the rate of IHT on the balance of the estate reduces.