Posted on: 11 Jul, 16
Providing your family with lasting benefits means taking preventative action now
Protecting your estate is ultimately about securing more of your wealth for your loved ones and planning for what will happen after your death to make the lives of your loved ones much easier.
Making sure that you’ve made plans for after you’re gone will give you peace of mind. It’s not nice to think about, but it means that your loved ones can carry out your wishes and be protected from Inheritance Tax (IHT).
You don’t have to be wealthy for your estate to be liable for IHT, and it isn’t something that is paid only on death – it may also have to be paid on gifts made during someone’s lifetime. Your estate will be liable if it is valued over the current IHT threshold on your death. The IHT threshold, or Nil Rate Band (NRB), is fixed until 2020/21 at £325,000.
Your estate includes any gifts you may have made within seven years of your death. Anything under the IHT threshold is not taxed (the ‘Nil Rate Band’), and everything above it is taxed – currently at 40%. Where a person dies and leaves at least 10% of their net estate to a qualifying charity, a reduced rate of 36% IHT can be payable.
Any unused proportion of the NRB belonging to the first spouse or registered civil partner to die can be passed to the surviving spouse or registered civil partner.
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