In the event of your death, your assets are subject to Inheritance Tax (IHT) which is charged at 40%. This is deducted from your estate before any of your beneficiaries inherit. However, there are a number of allowances, exemptions and reliefs which could be utilised to minimise or remove completely the IHT payable.
Therefore, it is vital that you review your affairs as early as possible and take the recommended steps to mitigate a potentially substantial and unnecessary inheritance tax bill. This is generally referred to as ‘succession planning’ or ‘inheritance tax planning’
Succession Planning should include the consideration of a wide range of actions:
Your pension is an asset which will normally fall outwith your estate on death. Who receives your pension is dependent on the type of pension and also whether you have made a Nomination in respect of what happened to your pension on death. If you have not completed a Nomination then the pension Trustees usually have discretion to award your pension to a dependent person, normally your spouse. If you would like to leave your pension to someone other than your spouse, such as children or grandchildren, then you will need to specifically include this in a Nomination.
If you would like assistance with reviewing your pension policy and current Nomination documents please contact us.
You cannot deliberatively deprive yourself of assets for the purpose of avoiding paying care costs. The local authority has the power to look back as far as they like into a person’s financial history to see whether they have deprived themselves of assets for this purpose. If they discover that this has occurred, the local authority has the ability to recover the assets from those who received them. There is no time limit on the local authority’s historical search powers.
This does not mean that there are no options available to minimise the exposure of assets to care costs. Planning for protecting assets from care costs is a complex matter and should only be carried out alongside receiving professional advice. If you would like to discuss the possible options available for planning then please contact us.
Lifetime gifting to children, and other individuals, is a purely subjective decision to be based on your own assets and personal circumstances. There are various gifting exemptions and rules which can be found on the government’s website page relating to Inheritance Tax.
If you would like to discuss the possibility of gifting assets we can provide estate planning advice tailored specifically to your particular situation.
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