Inheritance Tax can affect the amount that you leave when you die. Therefore, Estate Planning to include Wills and Trusts is vital to avoid depleting the financial value you leave to your loved ones.
Poor planning can result in Executors paying out huge sums of money from your estate to pay Inheritance Tax, yet with careful planning this can be significantly reduced and, in some cases, it can even be avoided altogether.
Inheritance Tax is due when a person’s estate (their property and possessions) is worth more than £325,000 when they die. This is called the ‘Inheritance Tax threshold’. As of 2020, the Tax is applied at 40% on the value of the estate over the Inheritance Threshold.
There are a number of factors to be considered when carrying out estate planning, these include:
- Business Trusts
- Residence Nil Rate Band Uplift
There is a reduction of the Inheritance Tax rate from 40% to 36% when you leave more than 10% of your estate to charity.
There are several things that can account as an individual’s assets, they range from:
- Cash in banks and ISAs
- Property and much more.
Why not use our Inheritance Tax Calculator below to get an idea of how much it might cost you?