What To Know About Inheritance Tax
Apr 30, 2024
Understanding the value in your estate.
Inheritance tax is tax that must be paid on someone’s passing if their estate is over their given allowance(s).
If you’re married it is only taxed on the second persons passing, as any assets passed from spouse to spouse is exempt.
There are two allowances that can be given.
- Nil Rate Band (NRB) £325,000
- Residential Nil Rate Band (RNRB) £175,000
In theory most people will have an £500,000 allowance which is the combined NRB and RNRB; if you’re married this is transferable and combines to £1,000,000. Allowances are not a guarantee, and you must match certain criteria to use your Nil Rate Band and qualify for your Residential Nil Rate Band.
There are also reliefs available, and this is something we would delve into with you in our initial meeting. Inheritance Tax is an important part of Estate Planning and is usually the first subject we broach with a client. This gives us a better understanding of what asset values you hold within your estate; this ensures we are advising correctly.
If you have minor children, a guardianship appointment is one of the most important clauses to be put within your Will. A guardianship appointment will state you would look after your minor children if you were to pass away. If there is no guardianship appointment made, there is a strong possibility that the children would be placed in temporary foster care while local authorities decide who would be the best people to look after them. When deciding who to nominate as guardians, it is important to consider the following: Would they be able to look after your children Do they have the space Are their beliefs/values similar to yours Their location and would the children need to move A guardianship appointment can only be made by a person who has parental responsibility, this can be a confusing area, so this will be discussed during your initial consultation and advice around this area would be provided.
Inheritance tax is tax that must be paid on someone’s passing if their estate is over their given allowance(s). If you’re married it is only taxed on the second persons passing, as any assets passed from spouse to spouse is exempt. There are two allowances that can be given. Nil Rate Band (NRB) £325,000 Residential Nil Rate Band (RNRB) £175,000 In theory most people will have an £500,000 allowance which is the combined NRB and RNRB; if you’re married this is transferable and combines to £1,000,000. Allowances are not a guarantee, and you must match certain criteria to use your Nil Rate Band and qualify for your Residential Nil Rate Band. There are also reliefs available, and this is something we would delve into with you in our initial meeting. Inheritance Tax is an important part of Estate Planning and is usually the first subject we broach with a client. This gives us a better understanding of what asset values you hold within your estate; this ensures we are advising correctly.
Intestacy or dying intestate is when a person passes away without writing a Valid Will. This then means that the deceased’s assets pass under the rules of intestacy. The Rules of intestacy can have big implications for anyone but especially unmarried couples, blended families, and those with few relatives. It is always best practice to have a Will in place to ensure your assets are ringfenced for the intended beneficiaries, otherwise you could be leaving your loved ones in vulnerable positions. The workflow below explains how inheriting under the rules works:
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If you have minor children, a guardianship appointment is one of the most important clauses to be put within your Will. A guardianship appointment will state you would look after your minor children if you were to pass away. If there is no guardianship appointment made, there is a strong possibility that the children would be placed in temporary foster care while local authorities decide who would be the best people to look after them. When deciding who to nominate as guardians, it is important to consider the following: Would they be able to look after your children Do they have the space Are their beliefs/values similar to yours Their location and would the children need to move A guardianship appointment can only be made by a person who has parental responsibility, this can be a confusing area, so this will be discussed during your initial consultation and advice around this area would be provided.