An increasing number of families are unknowingly facing an inheritance tax liability, as the older generations have accumulated wealth and property values have increased.
However, new rules coming into force soon may reduce the IHT liability for some home owners, with a new additional allowance called the “residence nil rate band”.
Currently, the allowance for individuals is £325,000 (the “nil-rate band”). For a married couple, this doubles to £650,000 (assuming on the death of the first spouse everything is left to the survivor).
This means that any money left under a Will (or under intestacy if there is no Will) which is in excess of the nil-rate band will be taxed at 40%.
From 6th April 2017, the residence nil rate band will add an additional tax-free allowance of £100,000 per person. This will gradually increase to £175,000, so that by 2020, a married couple will potentially be able to leave up to £1 million free of IHT. The residence nil-rate band will apply where an individual leaves their qualifying property to their direct descendants.
It is therefore a good time to review your Wills in order to ensure that your estate will make use of the residence nil-rate band in the best way possible. Some Wills may currently be written in such a way so as to prevent the extra allowance from being available.
Note that the new rules are complex and if the estate is worth more than £2 million, then the residence nil-rate band is tapered down.
Please contact us if you feel that your Wills need a review in light of the new allowance, or if you generally wish to discuss inheritance tax planning.
- Will drafting
- Review of existing Wills
- Advice re provision for children, second families, spouses and civil partners, unmarried partners and other family members
- Advice re charitable gifts
- Advice re foreign and business assets
- Advice re Will trusts
- Inheritance Tax advice.
- Advice re Trust creation and ongoing management
- Preparation of trust deeds and other trust documentation
- Declarations of Trust
- Termination of trusts.
Probate and Administration of Estates
- Advice re the terms of the Will or intestacy rules where there is no Will
- Obtaining values for the various assets and liabilities in the estate, notifying the various institutions and obtaining all necessary estate information
- Obtaining a grant of probate or letters of administration as appropriate
- Dealing with and advice re Inheritance Tax, Capital Gains Tax and Income Tax, liaising with HMRC
- Notifying and liaising with the beneficiaries of the estate
- Preparing a deed of variation or a deed of disclaimer in relation to the estate
- Selling or transferring the various assets due to the beneficiaries
- Dealing with foreign assets and Wills
- Advice re estate disputes and claims against an estate
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