The Essential Guide Magazine Culcheth July - August 2014 | Page 46

Essential Feature

Planning your estate
Estate planning should start early in life. If
your estate is worth in excess of £325,000
it could be subject to inheritance tax (IHT).
Even if it isn’t, careful planning and a welldrafted will can ensure that your assets will
go to your chosen beneficiaries.
Do you need a will?
Anyone who owns property - a home, a car,
investments, business interests, retirement
savings, collectibles or personal belongings
- needs a will. A will allows you to direct
by and to whom your property will be
distributed after your death. If you die
without a will, your property will normally
be distributed according to intestacy laws.
Assumptions about how these rules work is
a very common mistake.
Making your estate plan
Start by answering the following questions:
1. Who? Who do you want to benefit from
your wealth? What do you need to provide
for your spouse or civil partner? Should your
children share equally in your estate? Do
you wish to include grandchildren? Would
you like to give to charity?
2. What? Should your business pass only to
those children who have become involved in
it? Should you compensate the others with
assets of comparable value?
3. When? Consider the age and maturity of
your beneficiaries. Should assets be placed
into a trust restricting access to income
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or capital? Or should gifts wait until your
death?
Use your exemptions
You should make the best use of IHT
exemptions, including:

income

any number of persons
civil partners
If you die within seven years of making
substantial lifetime gifts, they will be added
back into your estate and may result in a
substantial IHT liability for the recipients.
You can take out a life assurance policy to
cover this tax risk if you wish.
However, you can make substantial gifts out
of your taxable estate into trust now and, as
a trustee, retain control over the assets.
Use the nil-rate band
Most transfers of property between spouses
or civil partners are exempt from IHT. This
means that when one partner dies leaving
some or all of their property to their spouse/
civil partner they may not make full use of
their own £325,000 nil-rate band. In these
circumstances, it is possible to transfer
unused nil-rate band allowances between
continued on page 48

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