Is It Important to Plan for Inheritance Tax Now?
Usually, yes. Many gifts of money, possessions, investments or property during your lifetime will be ignored when calculating inheritance tax. Some gifts, however, will be included because of the manner of the gift or subsequent actions by the donor.
Other gifts may be made in the 7-year period before death and the value is added back to the estate to determine the tax liability. The person who received the gift will pay the calculated tax. With planning these shocks and outcomes may be avoided.
Thinking about this sooner rather than later could increase the value passed to your beneficiaries of your estate by reducing the inheritance tax bill.
What Are the Benefits of Planning for Inheritance Tax?
Let’s imagine you want to pass on your estate to your children. Upon your death, they would be responsible for settling the tax that arises from inheriting your estate – and this could put them in a difficult financial position.
The good news is that there are things that can be done to plan ahead. This way, the recipient/s of your estate don’t end up with a crippling tax bill.
An individual’s estate benefits from the nil-rate band exemption of the first £325,000 – as well as any unused nil-rate band from the estate of a deceased spouse or civil partner.
