One of wealth management’s fundamental parts is planning Inheritance Tax. It is feasible for an individual to save their family substantial money in Inheritance Tax if they plan. Doing so eliminates all your worries because you know your wealth is safe and future generations will receive it when you pass away.
Inheritance tax specialists can help you plan inheritance tax. Their valuable advice will end up benefiting you a lot. Keeping the bill to the lowest amount is possible because of expert inheritance tax advisors.
Do not forget that your near ones may have to deal with the hassle of paying a bill once you die. Thus, do what’s necessary so that your loved ones get the maximum wealth of yours after your death.
Inheritance Tax: What Is It All About?
You should regard inheritance tax as the tax your family members may pay when your estate (as in whatever valuables you possess) is above a specific size. An individual’s estate mainly includes investments, savings, life insurance payouts, real estate, and other personal belongings. Therefore, there will be a subtraction of debts and liabilities from the total worth of your assets.
As per the nil-rate band, everyone in the United Kingdom can leave up to 325,000 pounds, for which their beneficiaries do not have to pay any tax. Moreover, there is no question of paying Inheritance Tax if you legally transfer everything above the IHT nil-rate band to your partner, spouse, or a charity. Therefore, reporting to HM Revenue and Customs is imperative if the worth of your estate is lower than the nil-rate band.
Who’s Liable to Make the Payment of IHT?
Primarily, the executor of a will (if you have one) is responsible for arranging to pay your IHT to HMRC. On the other hand, your estate’s administrator will have to pay the Inheritance Tax if you do not have a will. You can pay IHT from the estate funds or the money you raise after selling your assets.
Until your Inheritance Tax bill payment is unsuccessful, you won’t receive the Grant of Probate. Ultimately it restricts you from selling the assets you own within your estate. The best step is to utilize an executor loan to cover the Inheritance Tax liability.
Steps to Plan Inheritance Tax
Only inheritance tax specialists can help you out in planning Inheritance Tax in a better manner. Seeking their genuine advice can enable you to take the proper steps slowly and steadily. However, you must know that making a plan for IHT is essential, depending on your condition and situation.
- Make an estimate of the total worth of your estate
- Make a rough calculation of the due IHT once you are dead
IHT specialists use a specialized Inheritance Tax calculator to calculate the due Inheritance Tax. Once you know your estate’s approximate worth, developing an effective plan to reduce IHT liabilities won’t be difficult anymore.
Remember that a will is one of the crucial components of an IHT plan. You can choose a person you trust as an executor and mention the same in your will. The executor will handle your estate when you die.
Your assets will be distributed per the intestacy rules if you do not have a will, meaning your beneficiaries must pay IHT for your purchases after your death. So, if you want them to avoid such a scenario, writing a will has to be your priority.
Ways to Lower Your IHT Bill
Multiple ways are there to help you lower the tax you pay for your estate while you’re alive, besides reducing the IHT liabilities after your death. Here are some result-driven strategies to keep your Inheritance Tax bill minimal.
Gifting Money During Your Lifetime – One of the most effective ways to lower your estate size is to give money before your death. Gifting 3000 pounds worth of cash or assets under current rules is allowed. This money won’t be subjected to Inheritance Tax.
Set Up and Use a Trust – Setting up a trust can facilitate you to keep a certain amount of money aside while you are alive. This amount will benefit your loved ones at some point in time in a certain way. There is no strict rule to place your trust within your estate, which means your trusts are exempted from IHT. However, seeking an IHT specialist’s advice is advisable if you are serious about using your trust.
Aside from a couple of the most significant and feasible ways mentioned above, some other options for lowering your Inheritance Tax liabilities exist. For example, you can use your pension, include life insurance payouts within the trust you set up, and leave your wealth to a charity. Looking for genuine advice from an expert Inheritance Tax advisor before taking any step is prudent.