As a new year begins, now is the time to look to the future and start planning ahead. Ffion Thomson, Trainee Legal Executive with Fodens Solicitors, offers some tips.
If you’re looking to write a Will this year or want to check that yours makes the most of your estate, then we are on hand to offer advice and help reduce your inheritance tax (IHT).
Wills and Inheritance Tax
The purpose of a Will is to make sure your assets are distributed how you want, giving you reassurance that your loved ones will continue to be looked after. But once all debts are cleared, anything over the tax-free allowance is subject to 40% IHT, which means they could lose a large chunk of their inheritance.
So, how can Fodens help you plan ahead and reduce your IHT this year?
Celebrations and Gifting
“There are certain allowances available to help you mitigate your estate’s inheritance tax liability, although such rules can be complex so it is important to seek advice. However, one way which doesn’t involve changing your Will is through gifts, and you can gift up to £250 to as many people as you like,” says Ffion.
“That means you can celebrate birthdays and Christmases with all your loved ones without having to worry about anyone being hit with an IHT bill. And, as I am sure your significant other will be pleased to know, any gifts to your spouse or civil partner are exempt – so you can be as romantically extravagant as you like!”
Leave Behind a Legacy
“There are also other ways your lawyer can help by using allowances in your Will. For example, another way of reducing IHT is to leave behind a gift to a chosen charity. This could be anything from a fixed sum to a specific item, which is then taken off the value of your estate before IHT is calculated. However, if you choose to leave 10% or more of your estate to a charity, then the IHT can be reduced to 36%.
Most charitable organisations rely heavily on gifts and donations to do their work. Regardless of the donation size, leaving behind a legacy will help make a significant difference to their work while also ensuring your family will be looked after.”
Helping You Plan Ahead
In summary, there are multiple allowances available for reducing IHT, the rules of which can get complicated. If you are looking to plan ahead for the future, then it is best to seek professional advice. To learn more, reach out to the friendly team at Fodens and they will talk you through all the available options, helping find the most tax-efficient way of passing on your estate.
