The most important thing you can do to reduce the amount of inheritance tax that must be paid on your estate is to make a will. In the absence of a will, estates are distributed according to the rules of intestacy. This can result in higher amounts of inheritance tax being owed to HM Revenue & Customs. The wills and probate solicitors in London at SCL Wills and Probate can assist you with will writing services to help minimise inheritance tax.
Inheritance tax is an extremely emotional subject that has been increasingly politicised in recent years. If you are concerned about reducing the taxes paid by your beneficiaries, you may want to seek advice from experienced tax planning solicitors and probate solicitors. Visit http://www.sclwillsandprobate.co.uk/ to learn more about the services provided by SCL Wills and Probate.
Factors to Consider When Planning Your Estate
Transferring property is one way people use to help minimise the amount of tax that must be paid on an estate. For this to be successful, specific rules must be followed. Property can be transferred to a spouse or civil partner without inheritance tax. However, when a person is giving assets to children or another person, the donor must survive for another seven years and must not maintain any interest in the property or the property will continue to be considered part of the estate for tax purposes.
Trusts are sometimes used to reduce taxes owed on an estate. You may choose to create a discretionary trust or fixed trust for tax purposes. There are limits to the amount of money, property, or assets that can be gifted through a trust. Get the advice of your solicitor regarding these limits and any possible charges or periodic charges that may need to be paid before setting up the trust to make sure your goals are well served.
Do you plan to leave money to charity? Donations to charity that amount to at least ten percent of the value of the estate may reduce inheritance tax by up to 36 percent. Tax planning solicitors can help you make decisions about charitable donations to reduce inheritance taxes.
Making gifts during your lifetime to your beneficiaries can help avoid inheritance tax. This can be done in small gift allowances, larger annual gift allowances, and one-time tax free wedding gifts to children and grandchildren, and regular contributions from excess income. There are annual limits to each type of git, which may be exceeded, provided that you survive for at least seven years beyond when the gifts are made.
Investments made in unquoted companies, companies listed on the Alternative Investment Market, and investments for companies that are enterprise investment schemes may qualify for Business Property Relief. In order for the investments to be exempt from inheritance tax, you must hold the shares for a minimum of two years. If the investments are held for more than two years and still held at the time of death, your beneficiaries may enjoy 100 percent inheritance tax relief.
Planning ahead is the best way to minimise the inheritance tax that must be paid on your estate. Take into consideration all the possible options to make the best decision for your estate and heirs. Because each situation is unique and annual limits and other rules change periodically, it is best to consult with a solicitor for advice that is specific to your estate.