Law & Legal & Attorney Wills & trusts

Inheritance Tax and Gifts

"Potentially exempt transfers" are one of the most widely used tactics for reducing Inheritance Tax.
Providing that you survive for at least seven years after the date that you give away a sum of money as a "gift" to your beneficiaries, this means that not only can your loved ones benefit whilst you're still alive,but the final amount to be taxed on your Estate after your death will then be reduced.
Potentially exempt transfers as monetary gifts are not the only portions of your Estate which are free from Inheritance Tax liability.
They also come in the form of trust funds for children, who are not eligible to access the funds until the age of 18.
These are known as "bare trusts" and are one of the few trusts which do not attract Inheritance Tax.
Other trusts are generally considered as chargeable lifetime transfers.
Up to the tax threshold, the money held in these trusts are also exempt from Inheritance Tax, but above this rate, will be taxed at 20%, with a further 20% payable, should your death occur within seven years of your gift.
Some monetary gifts are classed as non-taxable, regardless of the length of time between giving the gift and the event of your death.
These include wedding gifts to your children (up to £5000 each), grandchildren (up to £2500 each) and to anyone else (up to £1000), gifts to charities and voluntary organisations and gifts of any sort of a value of up to £3000 each year.
Without effective professional tax planning, a substantial portion of your savings and assets could be lost through Inheritance Tax.
If you have built up some considerable assets, then the time to begin your financial planning is now.
In this way, you can be assured that the people who will benefit from your Estate will be your loved ones and those who are most in need of financial assistance - not the tax man.

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