At present any estate (that is the value of all your property at the date of death minus any debts) worth more than £325,000 faces 40% tax. This used to be 75% and what it will be in the future is unknown.
A single person or a divorcee can leave £325,000 tax free.
A widow or widower may be able to leave up to £650,000 tax free depending on what happened when their spouse died (Civil partners are treated the same as a married couple for IHT)
Gifts to a husband or wife are exempt from tax for the time being but do end up being taxed after the second death, for example if you own property worth £800,000 and leave it all to your wife or husband, no tax is payable on your death. When they die, assuming the property is still worth £800,000, tax would be due on £150,000 (£800,000 less the personal tax exemptions a married couple usually have of £650,000) at 40%, a total tax bill of £60,000 .
A little planning ahead might save all or some of that tax being paid to the Government and make sure more of your money went to your family or friends instead.
If you think you might benefit from tax planning advice, please let us know and we will advise you in more detail. The type of information we would need is approximately how much your various assets are worth, who you want them to go to in the end and what level of control over them you feel you need. You may not want to give a share of your house to a child if you do not feel able to trust them to co-operate with your wife, husband or other beneficiaries. If so we can advise you on the appropriate use of a Trust to achieve your objective safely.
For more information on inheritance tax click here: www.gov.uk/inheritance-tax/overview
If you are not in the happy position of having enough money to worry about inheritance tax, you may have the opposite problem - not enough money to ensure your dependants are looked after. A couple with a young family will have problems if either the husband or wife die. A wife may be left without a wage earner and a husband may be left unable to carry on full-time work due to a need to stay at home and look after the children. In these circumstances, you should seriously consider low cost straightforward life insurance.
If you are not married but live with someone and own a property together, what do you want to happen? Would you like your partner to inherit all your property including money and insurance policies or would you want to give them just your share of the home and everything else to relatives, other friends or charity.
Basically there are two sets of Inheritance Tax Rules.
One set for marrried couples, those in Civil Partnerships, widows and widowers.
Another set for everyone else, single people, divorcees and those who informally live together.
The basic difference is how each individuals IHT free allowance is treated.
For more information call us on 020 3633 4060