Protecting your wealth with a will

Inheritance tax applies to the worldwide estate of anyone who dies domiciled in the UK. At 40% of any value of an estate over £325,000, it is, potentially, a substantial liability.

However, assets given to a spouse or civil partner are exempt from IHT and the IHT free band is now transferable between partners. Taken together, these two features can be used to real advantage, achieving significant tax savings for your family and safeguarding your wealth.

So what does this mean in practice?

Assuming a straight-forward scenario, we will look at a married couple with total assets of £2 million. The husband's portion of the estate is equal to £1.5million of their total assets.

With a will

• The husband leaves everything he owns to his wife and dies first.
• Under the current regime there is no tax at all on his death and the widow has the security of owning the family home, and all other assets, outright. Further, their children will be able to claim both tax-free bands on her death.
• IHT will only apply to the portion of the combined estate over £650,000.

Without a will

• On the husband's death, his wife receives only £250,000 outright and the income from another £625,000 with the capital held in trust.
• Any children will receive the rest - ie £625,000 - outright when they reach 18.
• There is £120,000 IHT to pay on the husband's death.
• The widow may therefore not have enough capital for her needs and she may find her children own a share of the house - leaving her in a very insecure position

Click here to complete our questionnaire designed to assist you in the process of making the most appropriate estate plan, or for a no obligation chat about how we may be able to help you, please contact one of our team members below.

Thinking ahead...

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