Saving Inheritance Tax

db3745

In inheritance tax, how does the £325k/£175k money/property work with an elderly couple with 2 adult children, one living and will always live at home in the above property until after our deaths. Is this a simple procedure that a solicitor would cover in preparing our wills. On an estimate of a £700k property, and savings, mostly covered by ISAs, of almost £500k, what sort of charges would be likely to incur to minimise or save 40% tax on what I'd estimate may be £200,000 over the threshold. Though our pensions are relatively modest they match our outgoings each year. Our wills are outdated; I realise we have to take the plunge and update, but it grates to think that the majority of our wealth is in the house, but IFA fees I understand are based on the value of our joint estate, rather than the excess of the £200k which is at risk of being taxable. Would most solicitors specialising in wills handle both aspects for an agreed fee? Thank you.

Keep_pedalling

If on the death of the first spouse everything is left the the surviving spouse there will be no IHT as everything will be covered by spousal exemption and the unused NRBs can be passed to the surviving spouse and their estate will have £1M in exemptions. 

The same would apply if half the house had been left in trust for the children with the surviving spouse having a life interest.This is something you might do to protect your children loosing out in the event the surviving spouse remarried and failed to make a new will. 

The simplest way of reducing your IHT liability is to spend some of it, or gift it and keep breathing for another 7 years (you can cover IHT from an unfortunate early death through term insurance) I am puzzled why you think IFA fees would include the value of your home, unless you are thinking of doing something silly like putting your home in trust.

Albermarle

An IFA is for looking at your total finances, advising on investments etc. They do charge a % of your investable assets, but not on your cash savings or property value.

If you want to write new wills you need to go to a solicitor and they will have a fixed charge.

There is nothing to really handle as such regarding IHT. For sure you do not want to get involved in some type of complex financial arrangement/trusts, as they often just bring more problems and a lot of costs.

With IHT you have three simple options;
1) Just resign yourselves to paying it , you will not be alive anyway to worry about it.
2) Spend more of what you have got
3) Give away some of what you have got.

Although with 2) and 3) do not go too mad, as you might need expensive care at some point ( which will reduce your IHT bill !) 

DRS1

You mention one child living at home and likely to do so for a long time.  That raises questions about why they are doing that and whether they are in need of care.  What would happen to that child after you are both dead (or possibly sooner if you become unable to cope).  Is the child able to handle their own financial affairs?  Do they need some sort of trust arrangement?  Should they inherit more than the other child? That may be something your will should cover.