The Inland Revenue will receive 40% of your estate over the Nil Rate Band unless you plan in advance. With the Nil Rate Band currently being a mere £312,000 (April 08 - Mar 09), it is easy to see how Inheritance tax can affect most UK homeowners, particularly in the South East. Last year alone £2.9 Billion was paid in Inheritance Tax. For unmarried couples ... If your joint assets are above £312,000 an inheritance tax saving pair of mirrored wills can currently remove up to £125,000 of liability from your beneficiaries at second death. If tenancy in common is not an option, perhaps you are single or a widow, lifetime trusts can be used to help minimize inheritance tax but it is important to take advise from a specialist - contact us. If you are married ... If you are married, or have undergone a civil partnership you can now transfer over your deceased spouses tax allowance, providing you in effect with the right to benefit from 2 nil rate bands. For clients with an estate over £700,000 ... For clients with a joint estate over £700,000 the Revocable Life Interest Trust has proven to be extremely tax efficient with regard to estates that exceed 2 nil rate bands and are still liable for 40% Inheritance Tax. Should your estate be under this 'nil rate band' it will then be classed as an 'excepted estate'. Probate will still have to be obtained but no Inheritance Tax will apply, unless large value gifts have been made (see gifts). For single or widowed clients ... For single or widowed clients much can be done to help reduce any Inheritance Tax burden, through appropriate and careful financial planning. Please contact us for a recommendation. Gifts A common misconception is that IHT can be avoided by giving away the bulk of your estate before you die, however the Inland Revenue will take into account any large value gifts that have been made by you and tax them accordingly. In tax terminology, gifts are meant as a sum of money or a portion of your estate given away before death, often referred to as a 'potentially exempt transfer' or PET. Provided that 7 years have elapsed between the time of making the gift and your death, then no Inheritance Tax is payable. However, if death occurred during this 7 year period, and Inheritance Tax is payable on the estate, a discount applies to the tax liability that applies to that gift, for example: 0-3 years 100% chargeable, 3-4 years 80% chargeable, 4-5 years 60% chargeable, 5-6 years 40% chargeable, 6-7 years 20% chargeable. Act early, act now There are many ways in which both couples and individuals can minimise their inheritance tax liability - contact us and we can provide you with an overall review of your individual situation. We can help you plan to minimise or even eradicate any potential IHT liability and pass as much of your estate as possible to whom you choose rather than the Inland Revenue. The Flexible Life Interest Trust

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