Inheritance Tax Planning

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Do you know how much Inheritance Tax (IHT) might be payable on an individual's estate? Click here for an approximate calculation

The IHT threshold as at April 08–April 09 is £312,000. Above this, tax is payable at a rate of 40% on your estate subject to certain exemptions. The IHT threshold is to rise to £325,000 for deaths that occur between April 2009 until March 2010 with further envisaged increases to £350,000 for deaths occurring after April 2010.

For married couples and civil partners, the Government has introduced a special IHT relief for couples that can allow the IHT threshold to rise to a total of £624,000 between the couple. This relief does not apply to individuals or married couples. Please contact us for further details of this measure and how this affects your family's IHT position.

Wills and IHT

Using a 'discretionary trust' will can help your family:

(i)	Save IHT on the estate of the beneficiaries of your estate (for example save IHT to your grandchildren);
(ii)	Protect the assets against divorce of your beneficiary (for example, your children's share can be protected against potential claim from the spouse of your child on divorce);
(iii)	Protect the assets for your next generation of family (ie children, then grandchildren, great grandchildren – up to a period of 80 years).

IMPORTANT NOTE FOR ALL EXISTING MARRIED COUPLES WHO HAVE UNDERTAKEN A DEBT CHARGE SCHEME WILL (NIL-RATE BAND WILL): you ought not to have to change your existing will – it covers the Government tax changes and should not require amendment. Please contact Rob Cartmell if you wish to discuss this further.

The IHT planning wills that we currently adopt are:

1. THE NIL-RATE BAND TRUST WILL
(also known as the Debt Charge Will)

This Will utilises the IHT nil-rate band and is commonly known as the 'Debt Charge Will' or 'Nil-Rate Band Trust Will'. It is widely used and is the most common form of IHT planning.

The Will was introduced primarily for couples prior to 2007 as a simple way of increasing a couple's IHT threshold to £624,000. This has been largely superseded for married couples as a result of the Government's recent changes.

However, debt charge wills are still as important for unmarried couples and individuals making IHT planning arrangements for their next of kin.

By using this kind of will trust, an individual can protect assets within a trust so that the beneficiaries do not have to include the value received as assets of their own estate for IHT purposes. The potential IHT savings for the family can be 40% of £312,000 or more, depending on the circumstances.

We charge a fixed cost (per couple) for preparing these wills. a personal consultation is essential to understand how the will trusts can help your family's IHT planning.

For details or to arrange an initial consultation contact Rob Cartmell’s secretary Jan Lawrence.

2. THE EXTENDED DEBT CHARGE WILL
(also known as a DLI Will)

For estates of a couple (married or unmarried) exceeding £624k we recommend an extended form of the Debt Charge Will. For details or to arrange an initial consultation contact Rob Cartmell or his secretary Jan Lawrence.

PLEASE SEE OUR WILLS SECTION FOR INFORMATION ON HOW TRUST WILLS CAN ASSIST YOUR FAMILY'S ESTATE AND FINANCIAL PLANNING FURTHER – NOT JUST FOR IHT PURPOSES

OTHER ALTERNATIVES

1.	Lifetime Gifts – make lifetime gifts and if you survive for 7 years, the gift ought to fall outside of your estate for IHT purposes.
2.	Annual Gifts – make annual gifts of £3,000 (in total) and those gifts fall within your IHT allowance and do not count as part of the '7-year rule' as mentioned above.
3.	Regular Gifts – make regular gifts out of income. Contact us for further details of how this is effected – regular gifts out of your net income will not form part of the '7-year rule'.
4.	Discounted Gift Trusts – you make a gift to ao trust that is operated by a financial services provider. The 7-year rule is discounted by a designated amounted. Contact us for further information.
5.	Lifetime Discretionary Trust – place an asset (or capital) into the trust and after 7 years the gift can fall outside of your estate for IHT purposes. We can prepare the trust and advise you on how this can mitigate IHT.

To calculate inheritance tax payable click here.

PLEASE NOTE that the above details are based on our understanding of current IHT laws and is for information purposes only.

In this section:

	General
	Wills
	Probate & Estate Administration
	Inheritance Tax Planning
	Inheritance Tax Calculator
	Powers of Attorney and Elderly Care