Monthly Archives: November 2011
Giving away wealth
Tax-efficiently passing on parts of your estate
There are some important exemptions that allow you to legally pass your estate on to others, both before and after your death, without it being subject to Inheritance Tax.
Trust in your future
Helping you control and protect family assets
A trust is a legal arrangement where one or more trustees are made legally responsible for assets. The assets – such as land, money, buildings, shares or even antiques – are placed in trust for the benefit of one or more beneficiaries.
Transferring assets
Using a trust to pass assets to beneficiaries
Trusts may incur an Inheritance Tax charge when assets are transferred into or out of them or when they reach a ten-year anniversary. The person who puts assets into a trust is known as a settlor. A transfer of assets into a trust can include property, land or cash in the form of:
A gift with reservation
Getting the full benefit of a gift to the total exclusion of the donor
A gift with reservation is a gift that is not fully given away. Where gifts with reservation were made on or after 18 March 1986, you can include the assets as part of your estate but there is no seven year limit as there is for outright gifts. A gift may begin as a gift with reservation but some time later the reservation may cease.
Who gets what?
Don’t leave your heirs embroiled in years of legal feuding
If you leave everything to your husband, wife or civil partner, in this instance there usually won’t be any Inheritance Tax to pay because a husband, wife or civil partner counts as an exempt beneficiary. But bear in mind that their estate will be worth more when they die, so more Inheritance Tax may have to be paid then.
However, if you are domiciled (have your permanent home) in the UK when you die but your spouse or civil partner isn’t, you can currently only leave them £55,000 tax-free.
Take it step by step
How to avoid the probate pitfalls
A look at the steps to take in England and Wales (the process differs in Scotland and Northern Ireland).
The probate process
Getting started, what you need to know
Probate (or confirmation in Scotland) is the system you go through if you’re handling the estate of someone who’s died. It gives you the legal right to distribute the estate according to the deceased’s wishes. Inheritance Tax forms are part of the process even if the estate doesn’t owe Inheritance Tax.
Financial prudence
It’ll take longer to sort out your affairs if you don’t have a will
It’s easy to put off making a will. But if you die without one, your assets may be distributed according to the law rather than your wishes. This could mean that your spouse receives less, or that the money goes to family members who may not need it.
Combining predictability with clever planning
Make sure everything you own goes where you want it to tax-efficiently
Planning your finances in advance should help you ensure that when you die everything you own goes where you want it to. Making a will is the first step in ensuring that your estate is shared out exactly as you want it to be.