Wills, Lasting Power of Attorneys and Inheritance Tax Planning

11th March 2024

Peace of mind for your family: Wills, Lasting Power of Attorneys and Inheritance Tax Planning.

 

Benjamin Franklin is famously quoted as saying that “nothing is certain except death and taxes”. It’s a sombre thought, but it is important to have the correct planning in place to ensure that your estate passes in accordance with your wishes and with minimal exposure to Inheritance Tax.

 

Wills and Inheritance Tax Planning

A Will is a legally binding document that sets out how your estate will be divided in the event of your death. One of the main reasons to make a Will is to reduce the Inheritance Tax payable on death and ensure that as much of your estate as possible passes to your loved ones.

 

The current rate of Inheritance Tax on death is 40%, so there is often a significant amount of Inheritance Tax at stake. However, there are certain planning points that can be incorporated into your Will to minimise your Inheritance Tax exposure:
  • Ensuring that your tax-free nil rate and residential nil rate bands are fully utilised.
  • Making use of the various exemptions, such as the spousal exemption.
  • Leaving a legacy to charity to qualify for the reduced 36% rate of Inheritance Tax on death.
  • Planning and structuring around the use of Will Trusts as part of onward family succession planning.

 

 

Lasting Power of Attorney and Inheritance Tax Planning

A Lasting Power of Attorney (LPA) is legal document that empowers a trusted individual to make decisions about your finances, healthcare, or both if you become unable to do so due to mental incapacity.

When considering estate and IHT planning an LPA is an important consideration because if you lose capacity, there is no immediate right for a relative or friend to act on your behalf; your bank accounts are effectively frozen and gaining access can be a costly and time-consuming process.

An LPA allows you to appoint a trusted individual to act on your behalf should you lose capacity. This ensures that the attorney can continue to maintain your estate, manage your investments, and retain access to your bank accounts.

 

 

Inheritance Tax Planning
It is a common misconception that Inheritance Tax is solely a ‘death tax’. However, the planning that we undertake during our lifetimes, in addition to creating a tax efficient Will, can often pay dividends on death. Certain things that can be considered during lifetime are as follows:
  • Making gifts during our lifetime to reduce the value of your estate on death. Most commonly this is making lifetime gifts, but settling assets into a lifetime Trust is also an option.
  • Making use of various annual exemptions and the ‘normal expenditure out of income’ exemption, where applicable.
  • Investing in assets or property which qualifies for either Business Property Relief or Agricultural Property Relief.

 

 

How can we help?

Whitings has an extensive private client team, with a wealth of experience advising on Inheritance Tax, Estate Planning and non-contentious Probate matters. We are able to advise on Wills, Lasting Powers of Attorney, and Inheritance Tax and pride ourselves on delivering a timely, proactive and high-quality service to the highest technical standards, tailored to individual circumstances, goals and objectives, by understanding what matters most to you and your family.

 

If you are worried about Inheritance Tax or would like to discuss your personal circumstances further, please get in touch with your local Whitings office or your usual Whitings contact.

 

Disclaimer - All information in this post was correct at time of writing.
Other Blogs
Jaimie King
19th April 2024 Audit exemption limits set to rise

What could the changes to Audit exemption limits mean for you?   The government has recently announced changes to company law that will see company size thresholds increased by 50%. This is hoped to reduce complexity and additional burden for companies. These changes are intended to be in place for year ends commencing on or…

Paul Jefferson
18th April 2024 Beware of VAT refund fraud

Beware of VAT refund fraud!   We have become aware of several recent cases where taxpayers’ bank account details have been amended on the HMRC portal, without their knowledge, so that VAT repayments have been fraudulently diverted to a third party.   It seems that HMRC have been acting on the basis of a fraudulent…

Andrew Band
17th April 2024 Whitings 2024 Annual Farming Seminar

Our Whitings 2024 Annual Farming Seminar is just around the corner.   Farming always has to cope with changing environment, weather, commodity prices, political changes, etc. This year these challenges feel heightened and this is why we are pleased to welcome back speakers from the Andersons Centre to inform us of these changes and what…

Amanda Newman
17th April 2024 Buy To Let through a Limited Company

There continues to be an ongoing debate when buying a residential property to let out about whether to buy this personally or set up a limited company to own it. Unlike our sole trader v limited company comparisons for a trading business there is not a clear division based on profits. There are a lot…

Nick Edgley
11th April 2024 Do you need to re-register for Child Benefits?

If you’ve heard about the changes post 5 April 2024 and are wondering whether you need to re-register for Child Benefits, this is the blog post for you.   If you have been affected by the increase in the High Income Child Benefit Charge cap to £60,000, then you may need to restart your Child…

Peter Brown
10th April 2024 Pension Contributions for directors

Are you thinking about planning ahead for retirement and want to find out more about Pension Contributions for directors?   When it comes to planning for your retirement, Company pension contributions can offer significant benefits in terms of reducing your company’s Corporation Tax bill. Here’s how you can use both personal and company contributions to…