Can I / should I be discussing possible future IHT planning when creating a first will?

chockydavid1983

Hi

I’m looking to create a will for the first time. My situation is relatively straightforward but I still plan to engage a solicitor.
My non pension assets are currently under the IHT limit but will likely be above at some point in the future. I have no partner / children so plan to leave certain percentages of everything to other family.
Is IHT planning something separate to the will itself that I can come back to at a latter date or is it cost effective to do it all at once? I’m thinking of using something like Will Aid but that only covers basic wills.

Thanks,
Chris.

Marcon

chockydavid1983 said:

Hi

I’m looking to create a will for the first time. My situation is relatively straightforward but I still plan to engage a solicitor.
My non pension assets are currently under the IHT limit but will likely be above at some point in the future. I have no partner / children so plan to leave certain percentages of everything to other family.
Is IHT planning something separate to the will itself that I can come back to at a latter date or is it cost effective to do it all at once? I’m thinking of using something like Will Aid but that only covers basic wills.

Thanks,
Chris.

You don't say how old you are, but IHT planning normally involves taking certain irrevocable actions in terms of tying up assets (ie putting them outside your estate and/or the scope of IHT). If you have no partner or children, beware getting too enthusiastic about avoiding IHT; it won't benefit you to do so!

By all means discuss with your solicitor when you make your will, but it could be a bit premature, especially if you have yet to hit the IHT threshold.

Keep_pedalling

In you situation the only thing you can do with a will to avoid IHT is to leave every thing over the NRB to charity or a political party, but means your other beneficiaries get less than they would have done.

The best way to avoid / reduce IHT is go out and spend it while you can.  

trailingspouse

The best way to avoid / reduce IHT is go out and spend it while you can.  

Unfortunately, even that doesn't really help! If I go out and buy another property, a fancy car, jewellery etc, they would still count as part of my estate for IHT purposes...

And leaving 10% to charity just means that HMRC gets less and the charity benefits - it doesn't mean my other beneficiaries get any more than they would otherwise.

Keep_pedalling

trailingspouse said:

The best way to avoid / reduce IHT is go out and spend it while you can.  

Unfortunately, even that doesn't really help! If I go out and buy another property, a fancy car, jewellery etc, they would still count as part of my estate for IHT purposes...

And leaving 10% to charity just means that HMRC gets less and the charity benefits - it doesn't mean my other beneficiaries get any more than they would otherwise.

Even buying cars and jewellery helps as both those things have large depreciation, but I was thinking more along the lines of eating in nicer restaurants, staying in more luxurious holiday accommodation, not flying cattle class, drinking better wine ect. 

chockydavid1983

Thanks everyone! As you can probably tell, I'm new to all this, despite having read up a bit. I'm approaching 40.
Thanks for the info about IHT, that's good to know and if anything, simplifies my plans a little. I think the main way I would end up with more than the NRB outside pensions would be if I were to die early and unexpectedly but like you say, without a partner or children, there's no avoiding it really anyway. I'll update later if the estate grows significantly to include a charity donation but for now, I'm happy for it to go to family and be taxed if applicable.
I don't have a particularly expensive lifestyle so I plan on buying time rather than material things by moving to part time hours at some point so I can spend more time on my hobbies, none of which are particularly expensive either.
I'll go ahead and create a basic will through Will Aid or similar.

Thanks,
Chris.

stuhse

Keep_pedalling said:

trailingspouse said:

The best way to avoid / reduce IHT is go out and spend it while you can.  

Unfortunately, even that doesn't really help! If I go out and buy another property, a fancy car, jewellery etc, they would still count as part of my estate for IHT purposes...

And leaving 10% to charity just means that HMRC gets less and the charity benefits - it doesn't mean my other beneficiaries get any more than they would otherwise.

Even buying cars and jewelery helps as both those things have large depreciation, but I was thinking more along the lines of eating in nicer restaurants, staying in more luxurious holiday accommodation, not flying cattle class, drinking better wine ect. 

My thoughts : Or when you reach the point where you believe you have enough savings/pension to be comfortable...spend / give your excess cash on your future beneficiaries now.  That way you use your good fortune to improve their lives now, and get to see the smile on their faces while you are still alive-instead of lining the tax mans pocket.  You can gift so much money a year without incurring tax , but also there are other ways that the tax man wont see eg. when you go out for a meal/drinks with them,  pick up the bill....im sure you can extrapolate from that example.

But ensure you spend and enjoy your money as you go along...we all enjoy different things,  travel, nice cars, good meals, a bigger house, a boat , whatever....but dont sit on a fortune all your life to look down from up there to see someone else spending having a great time on all your hard earned cash. Spend it now, and/or share it with them now.

chockydavid1983

Thanks, that's definitely an important point. I am already helping those family members out who the money would be going to anyway but will probably do more going forward as the estate grows.

Keep_pedalling

chockydavid1983 said:

Thanks, that's definitely an important point. I am already helping those family members out who the money would be going to anyway but will probably do more going forward as the estate grows.

If you are gifting in excess of your annual allowances or gifting from excess income then you need to keep good records otherwise you will be making life very difficult for your executors.

chockydavid1983

Thanks, another good point. Yes, the gifts will exceed the annual allowance this year and probably the next couple of years too but then will be lower. In terms of record keeping, would I just keep my own records somewhere and have a note on my will stating where they are? I can easily make records as they are bank transfers.

Keep_pedalling

chockydavid1983 said:

Thanks, another good point. Yes, the gifts will exceed the annual allowance this year and probably the next couple of years too but then will be lower. In terms of record keeping, would I just keep my own records somewhere and have a note on my will stating where they are? I can easily make records as they are bank transfers.

I keep a spreadsheet of all our gifting (excluding Christmas and Birthday gifts) I keep a copy with a copy of sour wills, and our IFA also has a copy.