Inheritance Tax
& Estate Planning

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.

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, if applicable, the residence nil-rate band and what is left will be taxed at up to 40% – paid for by your family.  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.

At KWM we believe that 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.

You should create a Will*, consider giving your family gifts using the allowances available and also 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.

There are a number of methods that can be used to help reduce the amount of IHT your family will have to pay, including gifting and/or the use of trusts**, which are often considered key strategies in helping you pass on as much of your wealth as possible to your family.

A Gift Plan, which is a tax-efficient way of creating an investment fund for your beneficiaries to potentially reduce the value of your estate for IHT purposes, may be an ideal addition to your wealth management strategy.

A Trust places the right money, in the right hands, at the right time. They provide the flexibility, creativity and control that a will alone might not.

You could be forgiven for thinking that estate planning is about what happens to your assets after your death. And whilst to a certain extent, that is true, it’s also about organising your wealth now to ensure you maximise its effectiveness – whether that’s to safeguard and benefit your loved ones, or minimise the impact of taxation.

With a little bit of planning and some expert guidance, you can add some certainty to your financial future.

The value of investments will be directly linked to the performance of selected funds and these can fall as well as rise. You may get back less than the amount initially invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

* Will writing involves the referral to a service that is separate and distinct to those offered by KWM Wealth or St. James’s Place. Wills are not regulated by the Financial Conduct Authority.

**Trusts are not regulated by the Financial Conduct Authority.

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