It may come as a shock to discover that a large proportion of your wealth might be subject to Inheritance Tax (IHT) when you die.
This includes all of your assets such as the family home, investments, life assurance plans not in Trust and even old family heirlooms.
When do you pay Inheritance Tax?
Your estate will be subject to IHT if, when you die, if it exceeds the individual nil-rate band which currently stands at £325,000. Calculating how much your family will have to pay is often, although not always, simple. Count up the value of all the assets, subtract the nil-rate band and the RNRB if applicable and what is left will be taxed at up to 40% - paid for by your estate. If your spouse dies before you without fully using their nil-rate band, the unused amount can be carried forward to use when you die. The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.
Create a Will*
Draw up a Will and ensure it properly expresses what you wish to happen to your wealth. We can help you plan it correctly to save the maximum amount of tax. *
* Will writing involves the referral to a service that is separate and distinct to those offered by MFS. Wills are not regulated by the Financial Conduct Authority.
Protecting all that you hold dear
There are a number of methods that can be used to help reduce the amount of IHT your family will have to pay. Gifting and/or the use of trusts are often considered key strategies in helping you pass on as much of your wealth as possible to your family.
Using Trusts
A Trust places the right money, in the right hands, at the right time. Trusts are not regulated by the Financial Conduct Authority. The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.
How does the residence nil-rate band work?
Careful IHT planning is all about passing as much of your estate as possible to who you want to receive it, rather than to HMRC.
It’s also about maintaining flexibility and control over any arrangements that are made.
Consider an IHT-efficient fund
There are products available that enable the beneficiaries of your estate to meet any potential IHT tax liability without disturbing family wealth.
Give them a gift for the years ahead
Making a financial gift can be a valuable way to reduce the amount of Inheritance Tax your loved ones will have to pay when you die.
