Planning for Inheritance Tax

Inheritance Tax can be complex, it’s important to plan ahead and take advice. Book an appointment with Newcastle Financial Advisers to find out more about the ways you can reduce Inheritance Tax such as;

Gifts

Gifting some of your wealth away can, if managed correctly, and you survive long enough, help reduce the value of your estate.

It can be complicated...

The rules surrounding gifting are extensive; the best thing to do is to speak to a Financial Adviser about Exempt Gifts, Potentially Exempt Transfers (PET) and Chargeable Lifetime Transfers (CLT) to find out what would be suitable for your situation.

Trusts

If you want to ensure your loved ones receive a payout as soon as possible, combined with sensible Inheritance Tax planning, then you may need to consider Trusts. Moving part of your wealth into some form of trust can help to mitigate exposure to Inheritance Tax.

Trusts should be an essential part of your estate planning. But, depending on your needs these can be complex, you may need legal advice too.

Trusts are not regulated by the Financial Conduct Authority.

Life protection

Taking out a life insurance policy to pay some or all of an Inheritance Tax bill, can make things easier when it comes to sorting out your estate.

It can help protect your home from having to be sold to pay the Inheritance Tax.

You can reduce Inheritance Tax on your estate if your life insurance policy is written in trust during your lifetime. Make sure you speak to a Financial Adviser as this may not be appropriate in all instances.

Wills*

Irrespective of Inheritance Tax Planning, everyone should have an up-to-date Will. Remarkably 60% of all adults don’t have a Will.

If a person dies without a will in place their spouse or civil partner could eventually receive most of the estate, but not all of it. Apart from your loved ones not benefitting the way you wanted them to from your estate, the whole process will be slowed down without a Will.

If you are divorced you’ll need to consider the effect this will have on who is named as executors and beneficiaries in your Will. This can become complicated, so it is important to seek professional advice.

Making a donation to charity

Leaving a part or your entire estate to charity can reduce, and sometimes even eliminate Inheritance Tax liability.

Leaving something to charity in your will means it won’t count towards the total taxable value of your estate. This is known as leaving a ‘charitable legacy’.

If you leave at least 10% of your ‘net estate’ to a charity, you can reduce the Inheritance Tax rate on the rest of your estate from 40% to 36%.

If you’d like to discuss how you could plan for Inheritance Tax book an appointment with a Financial Adviser.

*Will writing is not part of the Openwork offering and is offered in our own right. Openwork Limited accept no responsibility for this aspect of our business. Will writing is not regulated by the Financial Conduct Authority.