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  • FIRST POST
    • matucana
    • By matucana 6th Feb 18, 4:27 PM
    • 13Posts
    • 0Thanks
    matucana
    How to leave an inheritance?
    • #1
    • 6th Feb 18, 4:27 PM
    How to leave an inheritance? 6th Feb 18 at 4:27 PM
    Hi, can anyone suggest the best way to leave a windfall for my children when I die?

    They are grown up (just!) and have left home so not technically my dependents......I am unlikely to ever be a home-owner or have significant assets I could potentially leave them.

    Should I stick with my life insurance (and write the policy in trust) which is up for renewal or is there a more effective way considering interest rates are so low?
Page 1
    • tacpot12
    • By tacpot12 6th Feb 18, 5:00 PM
    • 1,032 Posts
    • 875 Thanks
    tacpot12
    • #2
    • 6th Feb 18, 5:00 PM
    • #2
    • 6th Feb 18, 5:00 PM
    Life insurance is your best option. Writing the policy in trust will only be of benefit if the payout (plus any assets you expect to leave) will be above the Inheritance Tax threshold: currently 325,000, but it is simple to do, and might save some tax if you also have an unexpected windfall.
    • steampowered
    • By steampowered 6th Feb 18, 5:05 PM
    • 2,577 Posts
    • 2,501 Thanks
    steampowered
    • #3
    • 6th Feb 18, 5:05 PM
    • #3
    • 6th Feb 18, 5:05 PM
    If you are already paying into a life insurance policy, don't just cancel it willy-nilly, make sure you understand what you'd lose out on/get back by cancelling it.
    • atush
    • By atush 6th Feb 18, 6:05 PM
    • 16,802 Posts
    • 10,486 Thanks
    atush
    • #4
    • 6th Feb 18, 6:05 PM
    • #4
    • 6th Feb 18, 6:05 PM
    Do you have a work pension?
    • matucana
    • By matucana 13th Feb 18, 2:26 PM
    • 13 Posts
    • 0 Thanks
    matucana
    • #5
    • 13th Feb 18, 2:26 PM
    • #5
    • 13th Feb 18, 2:26 PM
    Do you have a work pension?
    Originally posted by atush
    Yes, I am enrolled in Nest. I was also paying into a private pension but had to take a break as I can't afford the contributions at the moment...
    • matucana
    • By matucana 13th Feb 18, 2:27 PM
    • 13 Posts
    • 0 Thanks
    matucana
    • #6
    • 13th Feb 18, 2:27 PM
    • #6
    • 13th Feb 18, 2:27 PM
    If you are already paying into a life insurance policy, don't just cancel it willy-nilly, make sure you understand what you'd lose out on/get back by cancelling it.
    Originally posted by steampowered
    Yes, have no intention of cancelling it - it's up for renewal when I reach 50..
    • Alexland
    • By Alexland 13th Feb 18, 2:35 PM
    • 2,547 Posts
    • 1,929 Thanks
    Alexland
    • #7
    • 13th Feb 18, 2:35 PM
    • #7
    • 13th Feb 18, 2:35 PM
    Yes, I am enrolled in Nest. I was also paying into a private pension but had to take a break as I can't afford the contributions at the moment...
    Originally posted by matucana
    Well if the names of the pension beneficiaries are up to date that would help.

    Ultimately apart from life insurance then there really is no way to pass on money you don't have. So to leave an inheritance you would need to focus on building your assets by maximising your income, minimising your expenditure and investing the difference wisely.
    • David Aston
    • By David Aston 13th Feb 18, 2:44 PM
    • 813 Posts
    • 542 Thanks
    David Aston
    • #8
    • 13th Feb 18, 2:44 PM
    • #8
    • 13th Feb 18, 2:44 PM
    Op, presumably you have a Will?
    • digbydog
    • By digbydog 13th Feb 18, 2:56 PM
    • 19 Posts
    • 114 Thanks
    digbydog
    • #9
    • 13th Feb 18, 2:56 PM
    • #9
    • 13th Feb 18, 2:56 PM
    My understanding is that 'money purchased pensions' are currently free of inheritance tax. My guess is that would include NEST, but I don't know for sure. The children can then take income from your pension, after you have gone, and pay tax at the rate appropriate to them.

    My understanding of using life assurance for inheritance planning is that it can be costly.

    I have read that both trusts and using pensions for inheritance tax avoidance are both being looked at and future governments, of whatever colour, might close these.

    Please bear in mind that inheritance tax allowances have become increasingly generous and further 'improvements' are due in the next few year. It may be a problem that you do not have. This link explains it far better than I can https://www.moneysavingexpert.com/family/inheritance-tax-planning-iht.
    • pelirocco
    • By pelirocco 13th Feb 18, 3:24 PM
    • 7,644 Posts
    • 8,536 Thanks
    pelirocco
    Yes, I am enrolled in Nest. I was also paying into a private pension but had to take a break as I can't afford the contributions at the moment...
    Originally posted by matucana
    Are you looking for the best way to leave the assetts you have now? , or are you looking to invest money to leave to your children ? , If the latter I would advise that you should be investing in looking after yourself for the future . You have said in this post that you cant afford contributions to your pension ? . If when the time comes you have something to leave , you need a will .
    Vuja De - the feeling you'll be here later
    • 6022tivo
    • By 6022tivo 13th Feb 18, 5:52 PM
    • 548 Posts
    • 130 Thanks
    6022tivo
    Has that not just been increased?
    • Alexland
    • By Alexland 13th Feb 18, 8:40 PM
    • 2,547 Posts
    • 1,929 Thanks
    Alexland
    The children can then take income from your pension, after you have gone, and pay tax at the rate appropriate to them.
    Originally posted by digbydog
    It depends if the children are the pension beneficiaries and which side of your 75th birthday you die.

    Alex
    • digbydog
    • By digbydog 14th Feb 18, 6:40 AM
    • 19 Posts
    • 114 Thanks
    digbydog
    Inheritance Tax and 75th Birthday
    ... and which side of your 75th birthday you die.

    Alex
    Originally posted by Alexland
    Could you expand on the impact of your 75th birthday as regards using a pension to avoid inheritance tax?
    • Alexland
    • By Alexland 14th Feb 18, 6:57 AM
    • 2,547 Posts
    • 1,929 Thanks
    Alexland
    Could you expand on the impact of your 75th birthday as regards using a pension to avoid inheritance tax?
    Originally posted by digbydog
    AJ Bell have a good guide

    https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/sipps-and-death

    Alex
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