Well, for many of us we won’t care what happens to our estate after we die – after all we won’t be here to worry about it. For many more of us the prospect of inheritance tax will not arise as the value of our assets will not be extensive enough for this to concern us or our heirs.
However, there will also be many people for whom inheritance tax is a looming problem, after all it’s only human nature to want to pass on as much of our accumulated wealth to our family or heirs as we can – this is far more palatable than letting the tax man get his hands on it – which is what will happen if you don’t prepare for it.
Advice and planning
But with some good advice and a bit of planning you can put in place some steps to ensure that any inheritance tax payable on your estate when you die is as low as possible. Here are some of the actions to consider:
- Make sure that you have a valid will – it’s estimated that around 50% of the people who die each year do so without having a will in place.
- If you have a will, just as importantly make sure that it is up to date. Things happen in your life that can affect how you wish your estate to be bequeathed.
- Make a list of your assets and consider what they are worth – you might be surprised. For most people their main asset will be their property, but do you have any idea what it is worth?
- Do you have any life insurance policies that are due to pay out when you die? If so, have you written them into trust? This is a relatively simple thing to do but has huge consequences, as potentially it takes the value of any such policies outside of your estate for inheritance tax purposes.
- Consider whether you wish to make substantial gifts to your beneficiaries now or in the future. If you survive the giving of the gift by seven years then it no longer becomes part of your estate for inheritance tax purposes. If you die after three years, but within seven years, then the value allocated to your estate will be assessed on a sliding scale – meaning any potential inheritance tax bill may be reduced.
But the most important thing to do if you are worried about inheritance tax is to take proper financial advice and get your affairs in order – it might seem tedious now but it could save thousands and thousands in the future!