Balancing your plan with other financial priorities is key
Making provision for Inheritance Tax needs to be balance the plan with your other financial priorities is key. Effective estate preservation planning could save a family a potential Inheritance Tax bill amounting to hundreds of thousands of pounds.
Continue reading “More families subject to Inheritance Tax”
Three in five UK adults have not made provision
It’s important to make sure that after you die, your assets and possessions go to the people and organisations you choose, such as family members and charities you want to support.
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Passing on your wealth in the right way is key for its preservation
The introduction of the Residence Nil-Rate Band (RNRB) has made it easier for some individuals to pass on the family home. The rise in property prices throughout the UK means that even those with modest assets may exceed the £325,000 Nil-Rate Band (NRB) for Inheritance Tax.
Continue reading “Inheritance Tax Residence Nil-Rate Band”
Giving away money from your estate to reduce your Inheritance Tax bill
Read more: https://www.which.co.uk/money/tax/inheritance-tax/inheritance-tax-planning-and-tax-free-gifts-aw1mb2n7snwx – Which?
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Considerations when making a Will
Thinking about death isn’t easy. Talking about it is even harder. The reality of our own mortality is a tough subject, but a discussion will ensure your assets are left to the right people.
Continue reading “Leaving your legacy behind”
‘Ring-fencing’ assets to protect family wealth for future generations
Trusts are used to protect family wealth for future generations, reducing the inter-generational flow of Inheritance Tax and ensuring bloodline protection for your estate from outside claims. The way in which assets held within Trusts are treated for Inheritance Tax purposes depends on whether the choice of beneficiaries is fixed or discretionary.
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Held for the benefit of a specified beneficiary
Bare Trusts are also known as ‘Absolute’ or ‘Fixed Interest Trusts’, and there can be subtle differences. The settlor – the person creating the Trust – makes a gift into the Trust which is held for the benefit of a specified beneficiary. If the Trust is for more than one beneficiary, each person’s share of the Trust fund must be specified.
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Wide class of potential beneficiaries
With a Discretionary Trust, the settlor makes a gift into Trust, and the trustees hold the Trust fund for a wide class of potential beneficiaries. This is known as ‘settled’ or ‘relevant’ property. For lump sum investments, the initial gift is a chargeable lifetime transfer for Inheritance Tax purposes.
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Discretion over which of the default and potential beneficiaries actually benefit
FlexibleTrusts are similar to a fully Discretionary Trust, except that alongside a wide class of potential beneficiaries, there must be at least one named default beneficiary. Flexible Trusts with default beneficiaries set up in the settlor’s lifetime from 22 March 2006 onwards are treated in exactly the same way as Discretionary Trusts for Inheritance Tax purposes.
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Family protection policies
These Trusts are often used for family protection policies with critical illness or terminal illness benefits in addition to life cover. Split Trusts can be Bare Trusts, Discretionary Trusts, or Flexible Trusts with default beneficiaries. When using this type of Trust, the settlor/life assured carves out the right to receive any critical illness or terminal illness benefit from the outset, so there aren’t any gift with reservation issues.
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