DEATH DUTY - INHERITANCE TAX - LEGAL REPRESENTATION
Our solicitors are able to give detailed advice on British inheritance tax otherwise known as death duty. They understand that you want your assets to go to your loved ones – not the tax collector. A solicitor can help you plan your estate so as to minimise the burden of death duty on your beneficiaries. However depending on the circumstances, certain gifts made during your lifetime can also become liable for inheritance tax.
The first step in death duty assessment is for you to calculate the value of your assets. Your solicitor needs to know how much your estate is worth in order to estimate your potential inheritance tax liability. Cash and real property such as homes are obvious assets, but keep in mind that things such as company benefits must also be included when calculating your worth. Also, it is helpful to begin to formulate an idea of how you would like your estate distributed after you pass away.
Currently, the UK does not have a gift tax. Sometimes it is of financial benefit for the testator to give away certain assets whilst they are still alive to avoid death duty on that item. A solicitor can help you decide whether making gifts of parts of your estate during your lifetime is a sound decision. Note that it is possible for a gift made during the testator's lifetime to wind up subject to the inheritance tax. Complicated estate and tax laws such as this are one reason why it is so important to seek the advice of a qualified solicitor.
As mentioned above, at the present time, there is no gift tax in the United Kingdom. However, that doesn't mean that all lifetime gifts will be tax-free. Most people are surprised to learn that a gift made during your lifetime may be subject to the inheritance tax after you pass away. If the gift giver does not live for at least 7 years after making the gift, then the gift is considered part of the estate for purposes of calculating death duty. An experienced solicitor can help you time your gifts so as to avoid the potential application of the inheritance tax.
With their extensive knowledge of tax and estate laws, our solicitors can help you decrease your inheritance tax liability. You may even be able to avoid death duty completely. Annual gift allowances and tax-free marriage gifts are just two of the options you can discuss with your solicitor. Married couples in particular can benefit from careful estate planning and asset management. Two nil rate inheritance tax bands and joint ownership of real property both offer ways to save on death duty.
A deed of variation is another estate planning technique that can help to reduce inheritance tax liability. A deed of variation, which is also referred to as a deed of family arrangement, is particularly beneficial if the testator is leaving all of their estate to a surviving spouse. The deed gives the surviving spouse two years within which to reallocate the assets in a more tax-efficient way. As a result, the amount of inheritance tax owed by the surviving spouse can be significantly reduced.