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| What
can I do to reduce the IHT bill? 1. Transfers of assets between spouses and civil partners are exempt from IHT, but other lifetime gifts may be more tax-efficient. 2. Lifetime gifts are potentially exempt from IHT, and there is no limit on such transfers, so this is an excellent way of transferring assets that you do not need to keep in your estate. It may be advisable to cover substantial gifts by insurance against death within seven years. 3. Trusts let you transfer assets out of your estate for IHT purposes, but enable trustees to exercise some degree of control over the capital or income (and you can be a trustee). There may be an IHT charge, but this would be at 20%, and then only if the transfer is over £300,000 for 2007/08. 4. Life assurance policies (unless designed to cover IHT liabilities) should be assigned during your lifetime so that the proceeds do not form part of your estate on death. The most common assignees are spouses, family members, and trusts. Conclusion We are living in an age of IHT planning opportunity. What you do is your decision, but the sooner you enlist our help the better. Remember, successful IHT planning has to be a team effort. Does your Estate Planning Pass the Test? It is never too early to plan your estate. If it is large, it could be exposed to inheritance tax at 40%, and if it is small, advance planning can help you ensure that your assets will go to your chosen beneficiaries. Currently only 6% of estates have a liability to IHT. This is forecast to increase substantially in the next five years. Making a Will Estate planning begins with the following decisions: • Who will inherit your assets? • When should the recipients receive them? • What limitations will be placed on the recipients? A will should also stipulate who is to be your minor child(ren)’s guardian. Although making a will makes your decision legally binding, the will can be amended any time you change your mind. |