Tax efficient estate planning – why you need expert advice

4 March 2022

Estate planning is not just for the super-wealthy. Anybody who wants to maximise their assets to pass on to their loved ones needs to plan their estate carefully.

Your estate is everything that belongs to you – your property, car, savings, investments, bank accounts, insurance policies and more. 

When you die your estate may be subject to Inheritance Tax and Capital Gains Tax, but with expert advice you can minimise the bill for your family.

Why do you need professional advice?

An estate planning expert will help to make sure your loved ones rather than HMRC receive maximum benefit from your estate. 

At Adroit our consultants would begin by discussing your goals with you. For example, do you want to provide a continuous income for your spouse? Would you like to leave money for a grandchild’s education? Do you want to protect your child’s assets in the event of divorce or bankruptcy? 

Once your goals are clear, we would explore the most practical and tax-efficient options with you.

With expert advice you can provide financial security for your family and save both time and legal costs in the long-term.

What is tax efficient estate planning?

When you plan your estate, an estate planning expert will discuss a range of matters with you including:

Making a will

Planning ahead by making a will can give you the peace of mind that your loved ones will be able to manage financially when you are no longer around. 

There is no Inheritance Tax to pay on assets you leave to a spouse or registered civil partner. By planning a will with an expert, you may be able to minimise the Inheritance Tax for your other beneficiaries. 

Making a will is an important part of estate planning because otherwise your estate will be divided according to the rules of intestacy. This could mean your assets are not shared in the way you would have wished. For example, unmarried partners and those not in registered civil partnerships have no right to inherit if their partner dies. The rules of intestacy are also not tax efficient.

In our blog post The pitfalls of online wills we share reasons why it is advisable to have a professionally drawn-up will.

Lasting power of attorney

By making a lasting power of attorney you are giving permission for a trusted person (or trusted people) of your choice to make decisions on your behalf if there comes a time when you cannot. 

Many people think their spouse or other next of kin will automatically be entitled to make decisions relating to their health, welfare, and finances if they lose mental capacity, but this is not the case.

Inheritance Tax planning

The current Inheritance Tax threshold is £325,000 which means no tax is payable on the value of an estate up to and including this amount (called the ‘nil band limit’).  

When the value of an estate exceeds the nil band limit the amount above the limit is taxed at 40%, unless the estate has been left to a spouse or registered civil partner.

There are plenty of ways you can reduce Inheritance Tax for your loved ones. For example, you can do so through your will, life insurance policies, tax efficient trusts and tax efficient gift allowances. 

Adroit estate planners can offer you advice tailored to your individual circumstances. We can help you to make the most of lifetime Inheritance Tax exemptions including:

  • Gifts. You can make gifts up to £250 per person per year, and you can give as much as you like to a spouse or registered civil partner. You can also give unlimited gifts to charities. 
  • The £3,000 exemption rule. You can give away a total of £3,000 in gifts during your lifetime without this money being subject to Inheritance Tax. 

It is important to know the rules surrounding gifts because Inheritance Tax can be payable on some gifts you make before you die.

How often should you update your estate plan?

Life is forever changes so it is important to make sure your estate plan stays up to date. A birth, death, marriage or divorce in the family can affect your plans. 

Changes in your own personal circumstances may also have an effect. For example, the value of your estate may increase or decrease, or your financial circumstances may change upon retirement. 

The government amends tax laws regularly which can also impact your decisions.

Do you need advice on tax efficient estate planning?

Adroit works with the UK’s leading estate planning experts. We can offer you an exceptionally personal service if you would like advice about tax efficient estate planning.

Our estate planning consultants work across the length and breadth of the country meaning we can provide a local service in the comfort of your own home.

To find out more please call 033 355 2964 or email info@adroitlaw.test

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