Inheritance Tax, Wills & Trusts Planning
The effective asset threshold for an individual is typically £325,000 (£650,000 for couples) that can be passed on tax free at death to future generations, after which all value is generally taxed at 40%, making Inheritance Tax a major consideration, particularly for high net worth individuals.
If considered early enough, there are many strategies that can be applied to reduce or even eliminate Inheritance Tax. The sooner you start to plan, the more strategies there are available to you.
Trusts can be used to protect and safeguard assets, as well as mitigate Inheritance Tax. However, setting trusts up can be complicated – a trust deed needs to contain details of the settlor, the beneficiaries, the trustees, the assets, the powers of the trustees and any other wishes that the settlor may have, which requires great care and needs to be done correcly, or it can leave the trust open to uncertainty and it may not achieve what you want it to. We can help you with these considerations and liaise with your legal adviser.
Good planning is therefore critical. Also there are tax aspects to be considered, including lifetime Inheritance Tax, potential capital gains on whatever assets are put into the trust, annual trust tax on income and gains from trust assets, periodic 10 year tax charges on assets in trust, distribution of income or transfers of assets to beneficiaries and finally the need for annual trust accounts depending on the complexity of your trust’s affairs.