Inheritance tax advice is a crucial aspect of any financial planning strategy.
Being able to pass on your assets to your family in an efficient way is important. However, what is more important is that you maintain flexibility over the use of your assets so that you do not give away money you may need in the future.
Planning for inheritance tax and structuring your assets in a way that will allow you use of them while you need them, whilst minimising any tax payable by your beneficiaries, can only really happen by firstly establishing your own personal and financial needs.
Inheritance tax advice, as suggested above should be based on a personal strategy that fits with your own personal needs for the future. Many people have a simple strategy of spending what they have and leaving the rest to their beneficiaries, whatever that may be, when they are gone. This is perhaps the most common ‘strategy’ that people employ. The problem here is that it is difficult to spend certain assets such as your home.
The nil rate band, the amount on which your beneficiaries pay no inheritance tax is currently £325,000 (2012/13 tax year). Your beneficiaries are liable for 40% tax on any assets passed down to them in excess of this value. The nil rate band often remains unused by the first partner to pass away, and so the Government now allows the surviving partner to use both allowances when they pass away so long as the couple were married or civil partners.
If your home is valued at more than this amount then even a £100,000 exposure could result in a £40,000 tax bill for your beneficiaries.