TRUST WORK & INHERITANCE TAX

The benefits of using Trusts

inheritance tax
Men with Calculator
setting up a trust
Inheritance tax

Trusts

 

The benefit of using trusts:

There is a common misconception that trusts, and the use of trusts, are solely for the very wealthy. However the reality is that trusts are available and accessible to all people and should be considered by all families!

A trust can be employed to ensure that assets move through and between different generations of a family, protecting against children’s divorces (or financial difficulties, for example bankruptcy), from unnecessary taxes or from unexpected changes in family circumstances.

 

A trust can be used to help with protection against assets being unnecessarily taken to pay for care fees.

Trusts can help realise and pay-out assets on death, without the possible delays otherwise created by the probate process.

They can be used to help with an efficient gifting of funds from grandparents or parents to help future generation’s university fees, or to support a property purchase.

Inheritance Tax 'IHT'

Inheritance tax (IHT) is a tax on money or possessions you leave behind when you die, and on some gifts you make during your lifetime.

In the 2020/21 tax year, everyone is allowed to leave an estate valued at up to £325,000.

 

Plus the new 'main residence' band of £175,000 giving a total allowance of £500,000 per person. For estates worth less than this, beneficiaries won't pay inheritance tax

 

Your estate includes your property, savings, and any other assets you pass on after debts and funeral expenses have been paid.

The BIG question... how much tax do you pay?

Your estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold when you die (or 36% if you leave at least 10% to a charity).

Our range of products includes:

  • Will Trusts

  • Discretionary Will Trusts

  • Flexible 2 Year IHT and Loan Trusts

  • Flexible Life Interest Trust

  • Property Protective Trust

  • Family Settlement Asset Trust

  • Disabled Discretionary Trust

  • Business Trusts & Legacies

  • Probate

  • Plus many more...

giving a gift? there's no tax to pay if you live a further 7 years...

Money given away before you die is still usually counted as part of your estate.

 

So people you give gifts to will be charged inheritance tax

(at a max of 40%) if you give away more than £325,000 in the seven years before your death - so early planning of how to pass on your assets is important. 

If you make large lifetime gifts, the beneficiaries could take out life insurance against the potential inheritance tax bill.

 

Most gifts into trust are now subject to inheritance tax even if made during your lifetime, but this is an area where you would need specialist advice from our team.

To make a no-obligation appointment with one of our Professional Estate Planning Consultants, click here or call the head office on 01843 269165

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Newlife Wills - Will Writing & Estate Planning Experts

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Phone: 01843 269165

Head Office:  Caroline House, 15 Hawley Street, Margate, Kent, CT9 1PU