Inheritance tax (IHT) is often referred to as a “death tax”, given that it is levied on estate when a person dies and is handing down their assets. Where the tax is due, it will be levied at 40 percent on the parts of the estate valued higher than £325,000.
“The importance of later life planning cannot be stressed enough.
“It is all too easy to ignore and to think it won’t happen to me or that you will have plenty of time to sort these things out and so at SFE, we’re pleased to have seen an increase in the numbers of people seeking out specialist legal advice during this time.
“If you’re thinking ahead to the future, we’d urge you to get in touch with a legal professional to help make sure you have all the necessary documents in place and that such documents are suitable for your needs.”
Michael went on to detail that alongside wills and power of attorney set ups, people need to consider their IHT.
As he continued: “IHT remains the least popular tax and despite recommendations for reform and simplification, it seems no such changes are forthcoming.
“The earlier you start to plan for IHT the easier it is to mitigate the tax, and maximise the amount that can be passed on to the next generation.
“Our advice would be to start planning with a thorough review of your current finances, plans for the future, likely retirement needs and securing a ‘rainy day’ or ‘disaster fund’.
“Once you’ve established your own needs, you can consider your hopes and dreams for your children or grandchildren, or perhaps any charities or causes you hope to benefit.”
Fortunately, Michael concluded by providing some tangible tips that people can follow to reduce their IHT costs: “There are a number of ways you can plan to save on IHT, including making gifts, creating trusts, taking out life insurance policies, nominating pension entitlements and if possible, increasing pension contributions which can be a secure fund to pass on to the next generation.
“Some people might consider equity release to enable them to pass on funds, and others may think about family investment companies. These steps allow you to still maintain your lifestyle and financial safety net, whilst still planning for the future.
“The key thing is to seek out professional advice early, and by looking out for an SFE accredited lawyer, you can have access to a specialist adviser who can offer all the assistance people need to plan for the future, from finances to health to end-of-life care.”