As we get older we balance accumulating assets and also deep accumulation.
For most couples and civil partners that would like to leave their wealth to their chosen dependants. Of course the less you have in your Estate the better. As we have mentioned before about the Nil Rate Band and the Residence Nil Rate Band, if you qualify the unfair tax, in my view, takes 40% of the rest of your Estate. However people need assets. The more assets they have the better they feel.
Lifetime giving is a good way to reduce Inheritance Tax but again so many need access or control of this money. It makes them feel better.
If you give shares away, for example, you are deemed to dispose of those shares at full market value and they will be liable to Capital Gains Tax.
Good Capital Gains Tax planning is to retain assets such as shares or property until death as this avoids Capital Gains Tax but Inheritance Tax is still there waiting for you.
You have to be careful about making gifts with reservation as they remain liable to Inheritance Tax.
Fortunately through the use of Trusts, such as Loan Trusts and Discounted Gift Trusts ,you can retain control of your assets and still save Inheritance Tax.
We should not forget that putting in place life cover paid on the second death is a way of getting money into the hands of your chosen beneficiaries to pay the tax. Fortunately pension plans are free of Inheritance Tax.
Equity Release enabling you to give money to your children feels good and can have the further benefit of saving Inheritance Tax.
There are also other assets which give you control of your money completely but they are generally high risk investments.
The next steps you take depends on your attitude to risk and your desire to be able to pass as much as you can to your family or chosen beneficiaries without the awful Inheritance Tax burden.
Trevor Downing FPMI FPFS
