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Inheritance Tax Planning

Inheritance tax is levied by the government when wealth is gifted by you during your lifetime or on your death. Inheritance tax planning minimises the amount of inheritance tax payable through efficient lifetime gifting, professional Will writing and trust creation together with the full use of inheritance tax allowances and reliefs.

Inheritance tax solicitors

Our specialist team of inheritance tax solicitors can help you arrange your financial affairs in the most tax efficient way possible. To speak to the Wills and inheritance tax team at OTS Solicitors please call us on 0203 959 9123 or complete our online enquiry form.

Inheritance tax: the basics

Inheritance tax is payable on death and is based on the value of your estate when you die. The rate of inheritance tax is currently forty percent of the value of your estate. The value of the estate is the amount of the relevant assets less any debts payable by the estate.

Your estate includes:

  • The property you own at the date of your death; and
  • Your savings and investments; and
  • Your personal belongings, such as jewellery, cars or wine collection; and
  • Your share of assets that you jointly own with your spouse, civil partner, cohabiting partner or third party; and
  • The value of any property or assets you have legally given away but you still get a benefit from. For example, if you transfer the family home to your child but you still live at the property or you give an expensive sports car away to a family member but still sometimes drive it; and
  • The value of a trust fund from which you get a benefit, for example an income; and
  • The value of gifts made by you in the seven years before your death, provided that the gifts are not covered by any exemptions to the inheritance tax planning rules.

International clients and inheritance tax  

OTS Solicitors have an international client base. Many of those international clients assume that as they are not British citizens they will not be liable to pay inheritance tax. However, the rules on inheritance tax are complex and your liability to pay inheritance tax is not based on British nationality.

 If you are:

  • Domiciled in the UK; or
  • Have lived in the UK permanently for seventeen out of the last twenty years

Then you will be liable to pay inheritance tax on your UK and overseas assets.Domicile is a difficult legal topic. Put simply, you may be domiciled in the UK if you are a British citizen who lives in the UK or you came to the UK from overseas and you have settled in the UK and view the UK as your permanent home because you have severed ties to your country of origin.

There could be a vast difference in the amount of inheritance tax your estate will be liable to pay depending on whether you are classed as domiciled in the UK or viewed as a non-domiciled person. That is because a person domiciled in the UK has to pay inheritance tax on their UK and overseas assets whereas a person who is not domiciled in the UK only has to pay inheritance tax on their UK assets.

If you have are any questions about your country of domicile it is essential that you take advice from a specialist inheritance tax solicitor who can look at your domicile and the best estate planning options with you.

Inheritance tax allowances and reliefs

Will and inheritance tax solicitors say that with careful professional estate planning the inheritance tax payable on the death of the deceased can be minimised. Some estate planning options are:

  • Lifetime gifting; or
  • Gifts made in contemplation of marriage (subject to strict rules and limitations); or
  • Gifts made to charities; or
  • Use of the inheritance tax transferable nil rate band (NRB). However, the transfer of assets to a spouse or civil partner by way of tax free gift will increase the value of the estate of your spouse or civil partner; or
  •  Use of the inheritance tax transferable residential nil rate band (RNRB). This is relevant if you own a family home and you pass or leave your family home to a family member when you die; or
  • Specific inheritance tax reliefs to reduce inheritance tax on some assets, such as business assets.

If you are worried about inheritance tax and its impact on your loved ones then the best option is to take specialist legal advice from inheritance tax solicitors to give you and your family peace of mind.

It is never too early to start inheritance tax planning as there are so many different options for you to consider and to decide on what works best for you, such as:

  • Transfer of assets into joint names; or
  • Lifetime gifting – if you are concerned about wealth leaving the family then any lifetime gifting can be combined with your family member signing a prenuptial agreement ,postnuptial agreement or cohabitation agreement with their spouse or partner; or
  • Trust creation – trusts can be created during your lifetime or in your Will; or
  • Asset structuring so your estate is as inheritance tax efficient as possible.

How can OTS Solicitors help?

In addition to advising on estate planning and inheritance tax the Wills and private client team at OTS Solicitors can also help you with:

  • The preparation of your Will or the updating of your Will , for example, after marriage, civil partnership, separation or divorce;
  • The completion of complimentary family law documents to provide additional asset protection, such as a cohabitation agreement, clean break financial order after divorce and financial settlement proceedings or a prenuptial agreement or postnuptial agreement;
  • The preparation of a power of attorney so a nominated trusted person/s can act on your behalf in a property and financial power of attorney or act on your behalf in a health and welfare power of attorney in case you lose capacity to make decisions.

Inheritance tax solicitors

Our specialist team of inheritance tax solicitors can help you arrange your financial affairs in the most tax efficient way possible. To speak to the Wills and inheritance tax planning team at London based OTS Solicitors about the best estate planning solutions for you please call us on 0203 959 9123 or complete our online enquiry form.

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