Will Inheritance Tax Affect Me

You may think that this is simply a case of finding out if it will affect you today, and if your estate is under the threshold then you can safely forget all about it.

However, unless you (and your spouse/civil partner) actually die in the next year or two, you simply can’t know whether or not you are going to be affected in the future. After all, we are talking about an event that hopefully will be many years hence in the future. By then all sorts of changes may have taken place, not only to the tax rules but also to your own circumstances, such as receiving inheritances yourself.

The first thing that you need to do is to find out roughly the value of your estate, or how much you’re worth. This is always a useful exercise and should be kept under regular review. Remember that this will include all assets, including any property or money you may have abroad, any investments, valuables, and so on.

If you have life insurance policies, sums payable by your employer on your death and pension funds you need to make sure they are written under trust or may be paid into a trust so that the money doesn’t simply go into your estate and thereby compound the problem.

If you are married or in a civil partnership, you will need to work out who owns what and if things such as houses are owned as “joint tenants” or as “tenants in common”.

The next thing to sort out is what is going to happen to these assets on your death (or that of your spouse/civil partner). For this you need to dig out a copy of your Will if you have made one and decide if it needs bringing up to date. (You can ask us to help put you in contact with one of our solicitor partners, if you need to make on or have it updated) This is very important indeed especially in view of the fact that only the unused proportion of a nil rate band can be transferred to the spouse or civil partner. Remember, if you don’t leave a Will the state decides who gets your money according to a strict pecking order called the “rules of intestacy” and they may not be the people you would have wanted to benefit.

If you are married or in a civil partnership and you leave everything to your spouse /partner on your death, then they will effectively end up with a double nil rate band (currently £650,000). If your combined estate is less than this figure, there will be no tax to pay if you both died today.

However, you must remember that with people routinely living way past their ninetieth birthday, protecting your wealth through timely Estate Planning is still very relevant for a great number of people even if they may not have an immediate problem today. 40% is the current rate of Inheritance Tax (IHT) and who is to say that won’t go up in the future?

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