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Charitable legacies on death
A reduced rate of IHT applies where 10% or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil-rate band) is left to charity. In those cases the 40% rate will be reduced to 36%.
Estate planning for single people
Single people might not have given much thought to estate planning, but you should make a Will to set out your preferred funeral arrangements, how you want your estate to devolve on your death, and who will have responsibility for it.
Your estate might pass to your parents or your siblings, but would you perhaps prefer to leave your wealth to your nieces and nephews – with the bonus of potential IHT savings through ‘generation skipping’? A Will is also vital for anyone who, although legally ‘single’, has a partner who they wish to benefit from the estate on their death.
Second marriages
Parents face a different set of challenges in second (or subsequent) marriages. If both partners are wealthy, you might want to direct more of your own wealth to children of your first marriage. If your partner is not wealthy, you might wish to protect him or her by either a direct bequest or a life interest trust (allowing your assets to devolve on their death according to your wishes). Should younger children receive a bigger share than grown up children, already making their own way in the world, and should your partner’s children from the previous marriage benefit equally with your own?
If you are concerned about your former spouse gaining control of your wealth, consider creating a trust to ensure maximum flexibility in the hands of people you choose. You also need to plan to ensure that your partner is properly provided for. Look at your Will, pension provisions, life insurance and joint tenancies.
Providing for the grandchildren
Your children may be grown up and financially secure. If your assets pass to them, you will be adding to their estate, and to the IHT which will be charged on their deaths. Instead, it might be worth considering leaving something to your grandchildren.
Updating your estate plan
Estate plans can quickly become out of date. Revisions could be due if any of the following events have occurred since you last updated your estate plan:
y the birth of a child or grandchild
y the death of your spouse, another beneficiary, your executor
or your children’s guardian
y marriages or divorces in the family
y a substantial increase or decrease in the value of your estate y the formation, purchase or sale of a business
y retirement
y changes in tax law.
Reviewing your Will
A Will can be a powerful planning tool, which enables you to:
y protect your family by making provisions to meet their future financial needs
y minimise taxes that might reduce the size of your estate y name an experienced executor who is capable of ensuring
that your wishes are carried out
y name a trusted guardian for your children
y provide for any special needs of specific family members
y include gifts to charity
y establish trusts to manage the deferral of the inheritance of any beneficiaries
y secure the peace of mind of knowing that your family and other heirs will receive according to your express wishes.
Having taken the time to make a Will and prepare an estate plan, you must review them regularly to reflect changes in family and financial circumstances, as well as changes in tax law. Wills can also be rewritten by others within the two years after your death, in the event that some changes are agreed by all concerned to be appropriate.
With regular reviews we can help you to ensure that you make the most of estate planning tax breaks.
Your next steps: contact us to discuss...
y Inheritance tax planning and writing a Will
y Gifts to charity and minimising tax on gifts and
inheritances
y Disposition of your assets on death
y Using trusts in lifetime and estate tax planning y Your choice of an executor
y Inheritance tax reduction planning and life assurance to cover any liabilities
y Naming a guardian for your children
y Lifetime gifts of assets, including business interests
y How your business interests should devolve if you die or become incapacitated
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