Plan ahead to reduce your inheritance tax – your will

No one likes to be reminded of the need to plan ahead with its specific implications but it’s the key to reducing the impacts of inheritance tax (IHT). The old adage that it’s ‘never too soon but often too late’ comes to mind but with expert advice, planning and guidance you can make sure your assets are protected and the family isn’t left with an excessive inheritance tax bill.

So you’ve decided you need to do something. What’s the first thing you should do?

The first thing I’d recommend is to make a will or to look at updating an existing will. Whilst this won’t necessarily mitigate IHT, the reality is that a will ensures your estate is distributed to your beneficiaries in accordance with your wishes. Dying intestate (without a will) simply means your assets are divided in accordance with established rules and not as you may wish. 

You need to be 18 years or older to make a will (there are one or two exceptions relating to serving soldiers or sailors). You can write your own will and there’s plenty of information available but we do recommend taking legal advice from a solicitor. Specialist advice can help avoid disputes that can so often arise. We don’t prepare wills but can work closely with you and your designated adviser to make sure your will is brought up to date to recognise your express wishes.

The surprising thing is that despite media coverage, recent research shows that nearly 60% of us don’t have a will. No wonder the IHT receipts are increasing!

Perhaps it’s just inertia or not wishing to contemplate the future but it’s a slightly worrying statistic. It’s fair to say not everyone without a will has a taxable estate but the potential remains that by doing nothing there could be an inheritance tax consequence. Even if you have no one to pass assets to, how about considering a charity? Any charitable bequests are IHT free and, from most people’s perspective, it must be better to leave money to a worthy cause rather than the Chancellor!

The next article will cover use of current exemptions but, until then, dig out the old will (if you have one) – you may be surprised!

Need help?

For more information on how we can help with inheritance tax, please speak to me or to your usual Larking Gowen contact.

Call 0330 024 0888 or email enquiry@larking-gowen.co.uk

Sally Farrow

Personal Tax Senior Manager