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Estate and Trust Planning Helping You Plan for Your Future and Your Family's Future 02 Guide to Estate and Trust Planning

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Estate and Trust Planning Helping You Plan for Your Future and Your Family's Future 02 Guide to Estate and Trust Planning GUIDE TO SEPTEMBER 2019 ESTATE AND TRUST PLANNING HELPING YOU PLAN FOR YOUR FUTURE AND YOUR FAMILY'S FUTURE 02 GUIDE TO ESTATE AND TRUST PLANNING GUIDE TO ESTATE AND TRUST PLANNING Helping you plan for your future and your family’s future WELCOME Welcome to our Guide to Estate and Trust assets to your beneficiaries in a manner that is Planning. Tis guide is designed to give you consistent with your goals and objectives. We TIME TO CREATE A a basic understanding of Estate and Trust provide an extensive range of services, plus BESPOKE PLAN THAT Planning and the issues you may face. We look the ability to tailor solutions based on your WORKS FOR YOU AND at various ways you could reduce a potential specific needs. WHAT YOU WANT TO Inheritance Tax liability in order to pass on as It‘s not easy projecting yourself into the ACHIEVE? much wealth as possible. future and seeing what‘s around the next bend. Every family is diferent, and Tis guide addresses the main arrangements Benjamin Franklin famously said: ‘Nothing can every estate is unique. We available to individuals. be said to be certain, except death and taxes.’ understand this, and we work Te language used throughout this guide is But while there’s nothing any of us can do with you to create a bespoke plan technical due to the nature of the subject. We about the former, there are steps you can take that is tailored for you and what always recommend that you obtain professional to legitimately reduce a potential Inheritance you want to achieve. To fnd out fnancial advice before making any decisions. We Tax liability. By structuring your assets in a more about how we can help and can help you understand these technical issues tax-efcient way, you can make sure everyone is our Estate and Trust Planning and make any decisions that are appropriate for provided for in the future. n services, please contact one of your personal circumstances. our experts for an informal chat On page 20, we have included a ‘glossary’ of ESTATE PLANNING AND TRUSTS ARE A – don’t leave it to chance. the technical terms to assist you. HIGHLY COMPLEX AREA OF FINANCIAL Estate planning is not just about reducing PLANNING. INFORMATION PROVIDED tax. It’s about giving you peace of mind for AND ANY OPINIONS EXPRESSED ARE FOR the future, knowing you’ll have enough afer GENERAL GUIDANCE ONLY AND NOT retirement and your loved ones will have the PERSONAL TO YOUR CIRCUMSTANCES fnancial support they need, which is why it’s NOR INTENDED TO PROVIDE SPECIFIC essential to make sure your wealth is protected ADVICE. PROFESSIONAL FINANCIAL for you and your family. By structuring your ADVICE SHOULD BE OBTAINED. WE assets in a tax-efcient way, you can make sure ACCEPT NO RESPONSIBILITY FOR ANY everyone is provided for in the future. LOSS ARISING TO ANY PERSON FROM There are many factors to consider: from ACTION AS A RESULT OF THIS GUIDE. simple gifting to more advanced planning with various entities, we can help you transfer GUIDE TO ESTATE AND TRUST PLANNING 03 04 10 12 14 20 CONTENTS 02 WELCOME 12 TRUSTS Helping you plan for your future and your How to give away your wealth and keep family’s future some control 04 INHERITANCE TAX 16 LASTING POWER OF ATTORNEY How do you leave a legacy which serves your Allowing someone to make decisions for you, family’s best interests? or acting on your behalf 06 RESIDENCE NIL-RATE BAND 18 WEALTH PRESERVATION How to apply the additional threshold Te 6 things you need to consider to help preserve your wealth 08 MAKING FINANCIAL GIFTS Passing on your assets efectively whilst 20 GLOSSARY you’re alive Estate and Trust Planning technical terms explained 10 MAKING A WILL Secure more of your wealth for your loved ones 04 GUIDE TO ESTATE AND TRUST PLANNING INHERITANCE TAX How do you leave a legacy which serves your family’s best interests? Will you be one of the thousands of rights under the Inheritance Tax rules. Tax can also become payable on the lifetime households in Britain that will have to pay However, there are steps people can gifs themselves – although gifs made between Inheritance Tax? What’s the best way to take to reduce the amount of money their three and seven years before death could qualify avoid it? If you’re administering an estate benefciaries have to pay if Inheritance for taper relief, which reduces the amount of because someone has died, how do you obtain Tax afects them. Where a person’s estate Inheritance Tax payable. probate? Is it ever possible to retrospectively is lef to someone other than a spouse or From 6 April 2017, an Inheritance Tax minimise an estate’s tax liabilities? registered civil partner (i.e. to a non-exempt RNRB was introduced in addition to the Inheritance Tax receipts reached a record benefciary), Inheritance Tax will be payable standard NRB. It’s worth up to £150,000 for high of £5.2 billion in the 2017/18 tax year on the amount that exceeds the £325,000 the 2019/20 tax year and increases to £175,000 according to fgures published by HM Revenue nil-rate threshold. Te threshold is currently for 2020/21. In order to qualify, you must own & Customs[1], despite the introduction of a new frozen at £325,000 until the tax year 2020/21. a property or a share in a property, which you residence nil-rate band (RNRB). have lived in at some stage and which you Families are becoming increasingly complex IHT is payable at 40% on leave to your direct descendants (including entities, ofen shaped by divorces, remarriages the amount exceeding the threshold children, grandchildren or stepchildren). For and children from previous relationships. Tis Every individual is entitled to a nil-rate band estates over £2 million, the RNRB is reduced can make estate and trust planning a challenge (NRB) – that is, every individual is entitled to at the rate of £1 for every £2 over £2 million. to navigate if an individual has strong feelings leave an amount of their estate up to the value of In addition, it only applies on death and not about those they would like to inherit their the nil-rate threshold to a non-exempt benefciary on gifs or any other lifetime transfers. assets and those they wouldn’t. without incurring Inheritance Tax. If a widow If applicable to your situation, efective estate or widower of the deceased spouse has not used Property, land or certain and trust planning could save your family a their entire NRB, the NRB applicable at the time types of shares where IHT is due potential Inheritance Tax bill amounting to of death can be increased by the percentage of the It might also apply if the person sold their hundreds of thousands of pounds. Inheritance NRB unused on the death of the deceased spouse, home or downsized from 8 July 2015 onwards. Tax planning has become more important provided the executors make the necessary If spouses or registered civil partners don’t than ever following the Government’s decision elections within two years of your death. use the RNRB on frst death – even if this was to freeze the £325,000 lifetime exemption, To calculate the total amount of Inheritance before 6 April 2017 – there are transferability with infation eroding its value every year and Tax payable on a person’s death, gifs made options on the second death. Executors or subjecting more families to Inheritance Tax. during their lifetime that are not exempt legal personal representatives typically have six transfers must also be taken into account. Where months from the end of the month of death to Reducing the amount of money the total amount of non-exempt gifs made pay any Inheritance Tax due. Te estate can’t pay benefciaries have to pay within seven years of death – plus the value of out to the benefciaries until this is done. Te Inheritance Tax is usually payable on death. the element of the estate lef to non-exempt exception is any property, land or certain types When a person dies, their assets form their benefciaries – exceeds the nil-rate threshold, of shares where the Inheritance Tax can be paid estate. Any part of an estate that is lef to a Inheritance Tax is payable at 40% on the amount in instalments. Benefciaries then have up to ten spouse or registered civil partner will be exempt exceeding the threshold. years to pay the tax owing, plus interest. n from Inheritance Tax. Te exception is if a spouse or registered civil partner is domiciled Certain gifs made could qualify for Source data: outside the UK. Te maximum a person can taper relief [1] https://assets.publishing.service.gov. give them before Inheritance Tax may need to Tis percentage reduces to 36% if the estate uk/government/uploads/system/uploads/ be paid is £325,000. Unmarried partners, no qualifes for a reduced rate as a result of a charity attachment_data/fle/730110/Table_12_1.pdf matter how long-standing, have no automatic bequest. In some circumstances, Inheritance GUIDE TO ESTATE AND TRUST PLANNING 05 INHERITANCE TAX IS USUALLY PAYABLE ON DEATH. WHEN A PERSON DIES, THEIR ASSETS FORM THEIR ESTATE. ANY PART OF AN ESTATE THAT IS LEFT TO A SPOUSE OR REGISTERED CIVIL PARTNER WILL BE EXEMPT FROM INHERITANCE TAX. 06 GUIDE TO ESTATE AND TRUST PLANNING RESIDENCE NIL-RATE BAND How to apply the additional threshold Te Inheritance Tax residence nil-rate band (RNRB) came into efect on For these purposes, direct descendants are lineal descendants of the 6 April 2017.
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