Changes To Inheritance Tax – Inheritance tax basics
When a person dies, inheritance tax is payable if that person’s estate, consisting of money, property and possessions, is deemed to be valued at more than the nil-rate band.
Since 2009 the nil-rate band has been set at £325 000, with anything above this being taxed at a rate of 40%.
If, when you died, your estate was worth £500,000, the first £325,000 would be free from inheritance tax, but the remaining £175 000 would be liable for IHT tax at 40%.
IHT can be reduced slightly to 36% on some of the assets, if the owner has left 10% or more to charity.
Any unused allowance could be transferred to a spouse or civil partner thus increasing the nil-rate band to £650,000 if the deceased did not use any of their own allowances (although this is very rare).
Read more in this article about ways to reduce your IHT liability.
So have you planned for the day you are no longer here?
The answer again is NO.
Why?
Estate Planning
It’s simple; people are not made aware of the processes that happen we you die. Have you got children? If yes, have you spoken to your family and your children about who would look after them if you were no longer around? Is this in your will as a Guardianship clause? Has the health of these people or the finances of these people changed? Are you still happy for them to look after the children?
What about your STUFF (Your estate)?
Who will claim everything on your behalf (executors): close accounts, pay your bills and sell your assets? Have these changed? Have you drafted this in your will as an executor and trustee? Is the value of things you are leaving behind enough to pay off all your debts: mortgage, loans, overdrafts, credit cards and does it leave enough for your surviving family to survive as you would want them to?
When a person dies, inheritance tax is payable if that person’s estate, consisting of money, property and possessions, is deemed to be valued at more than the nil-rate band.
