Inheritance tax on lifetime gifts
Most lifetime gifts are either fully or potentially exempt. However, tax is potentially payable by the recipient of the gift if the donor dies within 7 years of making it. Additional tax may be payable if the total value of the gifts made exceeds the tax free threshold again if the donor dies within 7 years. There are also lifetime exemptions covering for example gifts between spouses and civil partners.
Tax efficient wills
Since the 2007 pre-Budget Autumn statement, tax efficient wills are important for unmarried couples who do not benefit from the automatic transfer of the 2009/2010 nil-rate band allowance of £325,000 to a spouse and for those married couples whose assets are in excess of £650,000.
Can I save more?
One of the simplest ways is to give away as many assets as you can afford and survive 7 years. Although the Discretionary Trust Will described above can protect up to £650,000 of your joint estate from IHT (and married couples can now transfer any unused nil-rate band to the surviving spouse), there are other exemptions and reliefs available, particularly if your joint estates are worth more than this sum. We can prepare more detailed, flexible wills with the potential to save yet more tax.
How we can help
We have prepared a factsheet outlining inheritance tax planning in more detail. We can advise you on drawing up Nil Rate Band Discretionary Trust Wills as well as advising on more complicated arrangements.
