1

The amount of inheritance tax that will be due

In its simplest form, anything in your estate above £325,000 is taxed at 40%.

There is therefore a risk that your heirs will lose a large amount of their inheritance to the taxman. They might even have to sell assets or take out a loan to pay the bill. Knowing the implications means you can take action now, and your heirs will be grateful.

Many people feel uncomfortable about planning what will happen after they die. But talking about it now means you can set up tax-efficient arrangements to provide for your needs during your lifetime, while reducing the amount that will eventually become due to the taxman. It’s all part of sensible financial planning.

2

How to reduce your inheritance tax bill

Under current legislation, the taxman is often the largest beneficiary of any estate. However, there are various ways you can reduce or eliminate the potential inheritance tax bill, including:

Gifting: But beware; it can be difficult to decide how much to give away and when. Inadequate planning might mean you give away too much and can’t afford to pay for care in later life, or you might leave it too late to give tax-efficiently.

Investment: With certain investments, you retain control of your capital and income throughout your life. Assuming you have held the investment for at least two years, it will be completely free from inheritance tax.

Insurance: When your insurance policy is written in trust, the beneficiaries get the proceeds immediately, without having to wait for probate.

Spending: Yes, sometimes the best way to make use of your money is to spend it!

It is often appropriate to combine two or more of these options. The particular combination you’ll need depends on aspects such as age, requirements, timescale, attitude to risk, and appetite for investment.

3

You can pre-fund the inheritance tax bill

You can take out an insurance policy to pay the inheritance tax that will become due on death, without disrupting any other assets. It may cost less than you expect. To maintain peace of mind, we recommend you review your arrangements regularly.

4

A trust can protect family wealth

Trusts are a tax-efficient way of gifting, while retaining an element of control.

A family trust not only helps save inheritance tax, but also ensures that family wealth is not lost through divorce or bankruptcy.

They can be surprisingly simple. With the right structure and investments, a family trust generates income or capital payments while growing your wealth through the generations.

5

We can help!

With access to all the products on the market, we can advise you about the best way to help reduce inheritance tax and so increase the net amount your heirs will receive. We also work with your legal adviser – or can introduce you to one – to help set up the right structure for your family needs.

To arrange your initial appointment, please contact us on 020 8891 0711 or hello@globeifa.co.uk

The Financial Conduct Authority does not regulate taxation and trust advice.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.