Inheritance Tax Planning: Protecting Your Legacy
Planning your inheritance is more than just the protection of your financial assets, it’s about ensuring your legacy is protected, and that your loved ones are supported for generations to come.
Planning your inheritance is more than just the protection of your financial assets, it’s about ensuring your legacy is protected, and that your loved ones are supported for generations to come.
Planning your inheritance is more than just the protection of your financial assets, it’s about ensuring your legacy is protected, and that your loved ones are supported for generations to come.
By acting now, you can take the necessary precautions to reduce the cost of paying inheritance tax, creating better opportunities for your loved ones, and giving them a better quality of life.
Navigating inheritance can be tricky without the knowledge of how you can avoid paying more tax than necessary. Keep reading to learn how you can pay less inheritance tax.
One of the best ways to protect your assets, and best wishes, is to craft a well-written will describing exactly your requests. A will provides you with clear control - in the case that you don’t have a written will, government legislation will decide how your assets will be distributed after death.
Not only does a will protect the distribution of your assets, but it can also be a fantastic way of being tax efficient. With the inclusion of trust allowances, gifting, and any relevant tax exemptions, you can avoid paying more inheritance tax than you need to.
Check out our previous blog to learn about the reasons you should make a will, click here to read it.
If you’re a business owner, or investor, looking to spend less on inheritance tax, you may be eligible for business relief. Business relief is an incentive reducing, or eliminating the amount of inheritance tax that you pay on certain business assets. Business relief rates come in at either 0%, 50%, or 100%, depending on the type of assets and their uses, with 100% meaning that you will pay no tax on this amount.
There are also certain investments that you can make to allow you to reduce the amount of inheritance tax you pay on business relief. To achieve 100% business relief rates, your assets, and business must match a certain criteria, and there are methods to help you qualify for this.
Contacting a reliable solicitor can help you to make an informed decision, with your best interests at heart. If you’re looking for professional legal advice, click here to get in contact with our expert team.
Creating a trust is a way to reduce inheritance tax, essentially giving you the opportunity to gift your assets to your desired beneficiaries, such as your loved ones. When you set up a trust, you’re moving assets out of your estate and into the name of your chosen beneficiaries, with a third party (trustee) protecting their assets up until payout.
While the trust will have its own costs and taxes, it may be a worthwhile investment to avoid paying inheritance tax. To weigh up the pros and cons to setting up a trust, you should seek professional advice from a trusted solicitor, who will be able to guide you to make the best decision for your circumstance. Click here to learn more.
It is also possible to include life insurance within your trust, potentially enabling the payout of your assets so they don’t form part of your estate, helping to cover inheritance tax without actually adding to it. The important thing to note is that life insurance is costly, again making it advisable to contact a reliable solicitor to help make an informed decision.
There are plenty of different methods to avoid paying excess inheritance tax through gifting. Whether you have a surplus of income that you would like to gift regularly, or you would like to make use of exempt gifts, creating a clear financial plan can allow you to set aside money for gifting that will be received by your chosen loved ones.
Gifts made regularly out of surplus income will be exempt to inheritance tax, and will not be included in your estate, making this an easy way to support your loved ones. You can also give away up to £3,000 each year without it being added to your estate, with other exempt gifts, such as marriage contributions, going untaxed.
While gifting is a fantastic way to avoid paying, or reducing inheritance taxes, it is important to ensure that you are gifting within your means, and that you still have enough money to meet your own needs.
The most important thing that you will need to plan for the future is to have professional legal knowledge on your side. A reliable solicitor will not only bring legal know-how, and experience, but they will be able to dive into your current situation to create a clear plan that sets you, and your family up for the future.
A solicitor will be able to provide you with expert advice on how to maximise your limits, such as the nil-rate band, and advise on worthwhile investments that can help bring your inheritance tax down. While a solicitor will advise you to make certain decisions, and can help you in making them, they will ultimately give you the choice of the route you’d like to take, so that you’re happy with the distribution of your assets.
It can also be difficult to keep up with the latest updates and changes to financial policies and regulations, whereas a solicitor will be fully informed of the UK’s current laws, and budget, with a clear understanding of any key updates.
As of the UK Autumn Budget 2024, there were plenty of changes made to inheritance tax. Major changes include:
Threshold Freeze Extension, meaning that the nil-rate band will remain frozen until 2030, at £325,000, and the residence nil-band at £175,000.
There will also be an inclusion of pension pots into an individual’s estate as of April 2027.
Business and agricultural assets will be capped at £1m for business property reliefs at 100%, with any assets exceeding this receiving a 50% relief.
Executors will face administrative complexity as of the formal valuations of pension funds and restricted reliefs for agricultural and business properties
If you’re looking for expert legal advice, with extensive experience in a range of legal fields, Freers Askew Bunting are the perfect solicitors for you. With over 70 years of experience in the North East, our dedicated team brings a blend of expertise and care to each client, ensuring your best interests at heart.
We specialise in context and clarity, simplifying the complex legal jargon that comes with financial planning, wills, trusts, or any other legal matters you wish to take on. With experience in dealing with a wide range of complex situations, we work with you to find the solution on the terms that fit you, ensuring a smooth, stress-free process.
Looking to get started? Contact a member of our expert team to discuss your vision.
Email: Enquiries@freersaskewbunting.com Call: 01429 743300
