None of us like to tempt fate or ponder worst case scenarios. So, talking about what the future might hold upon a loved one’s death is never an easy conversation. However, it is a conversation that can’t be ignored.
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It is widely rumoured that there will be a change to inheritance tax with the next government budget at the end of October, and it’s predicted that the change will potentially lower the tax-free threshold. With a degree of uncertainty hanging over inheritance rules in the coming months, it makes sense to take action to make sure there are no unforeseen surprises down the line.
Now is the perfect time to not only get your own affairs in order, but ensure your parents and grandparents have an effective estate and inheritance plan in place too.
ILAWS Scotland are estate planning experts and can assist you in making sure your wishes for your estate are safeguarded no matter what the future brings.
Offering free expert advice, ILAWS can help ensure your family will receive the inheritance you have worked so hard to give them. This includes ensuring your estate will not be affected by potentially avoidable inheritance tax.
Will I need to pay inheritance tax?
We spoke to Tony Marchi, principal at ILAWS, to find out more about the implications of inheritance tax.
He said: “Currently if you are a single person, you have a personal inheritance tax allowance of £325,000. If you don’t own a house, you’ll pay 40% tax on everything above that threshold.
“As well that, if you own a property and you are passing on to direct descendants like a daughter, son, granddaughter or grandson, then you have up to an additional £175,000 Residential Allowance. So that would give you up to £500,000.
“If you are a married couple that doubles so you can have a million pounds on your estate. It’s also worth noting there’s no inheritance tax between spouses on first death, however there is with partners.”
These may seem large figures, and as such you may not think inheritance tax is something you need to consider. But Tony points out the reality isn’t always as simple as that. Tony explained: “There’s other aspect you need to be thinking about. If, for example, you have a £500,000 house and some savings, and you have two or three children who are doing quite well for themselves, when you pass your estate onto them, that might be creating an inheritance tax burden for them.
“Then in a similar scenario, that burden might eventually get passed to your grandchildren, who may also be doing quite well for themselves. Then your grandchildren get hit by a huge inheritance tax bill.”
Children should be talking to their parents about this, and they need to consider it’s also their children who can be affected by this too
Protect your home and your financial legacy
However, Tony advises there are ways to plan for this using Trusts. He added: “It’s about protecting your property to make sure you can pass your home on and it won’t be taken for care home fees, but then also making sure you’re not going to lose 40% of that to inheritance tax.”
As much as we put off having the conversation Tony’s advice is clear. He said: “Children should be talking to their parents about this, and they need to consider it’s also their children who can be affected by this too.”
When it comes to inheritance tax, you can trust ILAWS. In the New Year ILAWS fees will be changing, so act now to take advantage of this year’s prices. Take the first step in securing your future with a no-obligation, free consultation with ILAWS Scotland.
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