Estate & IHT Planning

Without proper estate planning, your assets may not go to your intended beneficiaries. The laws of intestacy will dictate asset distribution if you pass away without a valid will, which may not align with your wishes.

While gifting can help reduce your estate’s value, there are specific rules and limits. The government allows for certain exemptions, but gifts made within seven years of your passing may still be subject to IHT, leading to unexpected tax implications. The amount and timing of these gifts is important to understand.

Many individuals are surprised to find that their assets, including property and pensions, can push their estate above the nil rate band. A financial adviser can help you understand your estate's potential value and plan accordingly.

While it’s true that you won’t be personally responsible for paying inheritance tax after your death, the impact of IHT can significantly affect your beneficiaries and the management of your estate.

Many people assume that their heirs will easily access their assets without considering the tax implications. However, if your estate exceeds the nil rate band, a 40% tax on the value above this threshold can create a substantial liability. This tax must be settled before your assets are distributed, which can lead to several challenges:

• Liquidating Assets: Your executors may need to sell investments or property to cover the tax bill, potentially forcing them to sell at an inopportune time, which could diminish the overall value of your estate.

• Executor's Loans: In some cases, executors may need to take out loans to cover inheritance tax costs. This can create additional financial strain, as the loans would need to be repaid from the estate, reducing the amount available to your heirs.

• Delay in Distribution: The process of assessing the estate’s value, paying taxes, and then distributing assets can be lengthy. This delay might leave your beneficiaries in a difficult financial position during a challenging time.