Our Advice
Our advice was to put some money into a Discounted Gift Trust and a Loan Trust the benefits of each investment, in her individual circumstances, are as follows:
Discounted Gift Trust
- An immediate saving of £40,000 Inheritance Tax, so if the client died within 7 years the IHT bill would be halved
- After 7 years there would be no Inheritance Tax Liability
- This investment generates £8,000 per annum for the client
Loan Trust
- Full access to this money if needed
- Growth on the investments falls outside the estate making it more likely that any future IHT liability will be removed/reduced
- If any IHT bill should become payable in future, the monies held in this investment would become immediately available to help pay this tax bill
- Client can withdraw money every year to use her gift allowances, which makes her financial planning even more effective
The Outcome Achieved
Our client has enough income to enjoy her later years. She has enough capital to fall back on if she needs it. She has potentially saved her children an Inheritance Tax bill of £76,000.
How You Can Reduce Your Inheritance Tax Bill
There are many things you can do to reduce your estate’s tax bill and we can help you through our effective estate planning service. After your death we can also help your family to calculate the value of your Estate and get the funds from your pension providers and other financial institutions. This can be a complex and time-consuming task. We can work closely with your family and Executor throughout the process.
Here are some of the things you can do to lessen the amount of Inheritance Tax your family may need to pay the when you die.
- Make a Will – an effective will could help to reduce your inheritance tax bill. Note: Will writing is not regulated by the Financial Conduct Authority
- Look into exemptions – there are a number of exemptions you can use to reduce the value of your estate. For example, moving assets between spouses or civil partners does not create a tax liability
- Consider gifts – if you can afford to give away some of the assets you own, it may be possible to reduce the size of your estate, you can make gifts of up to £3,000 annually
- Think about life insurance – a life insurance policy won’t actually lessen the inheritance tax bill, but the proceeds could be used to help pay the bill on your death
- Consider trusts – if structured carefully, trusts can help to reduce or possibly even eliminate your inheritance tax liability. Note: Trusts are not regulated by the Financial Conduct Authority
With a little estate planning we may be able to reduce the Inheritance tax bill paid by your estate or avoid paying Inheritance tax at all.
Contact us and arrange to see one of our Financial Advisers and see how we can help you with your estate planning. Because we provide local financial advice in Sutton Coldfield, we can visit you in our home or you can come to our office which is close to both Lichfield and Sutton Coldfield.
Get in touch via our contact us page, by telephone or email. We can arrange to meet you at your home or our offices with free parking for Financial Advice local to Lichfield and right across the greater Birmingham area.