Tax, Trust & Inheritance Tax (Estate) Planning

​

Although tax and estate planning can be a complex task, a well-informed plan can make a big difference in what is available to you whilst you are alive or left for your loved ones after you have gone.

 

Taxes

​

When building a financial plan it is vital that the effect of any given strategy pays attention to any tax consequences that may arise. Whilst tax shouldn’t affect the stated objective or drive contract selection, its impact will have a bearing on the net returns enjoyed.  There are many difference ways of mitigating tax (not avoiding) and we can help you make the most of the money that you work hard for.

 

Trusts

 

A trust is traditionally used for minimising estate taxes and can offer other benefits as part of a well-crafted estate plan.

​

A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.

​

Since trusts usually avoid probate, your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will. Additionally, if it is an irrevocable trust, it may not be considered part of the taxable estate, so fewer taxes may be due upon your death.

​

Assets in a trust may also be able to pass outside of probate, saving time, court fees, and potentially reducing estate taxes as well.

​

Other benefits of trusts include:

​

• Control of your wealth. You can specify the terms of a trust precisely, controlling when and to whom distributions may be made. You may also, for example, set up a revocable trust so that the trust assets remain accessible to you during your lifetime while designating to whom the remaining assets will pass thereafter, even when there are complex situations such as children from more than one marriage.

• Protection of your legacy. A properly constructed trust can help protect your estate from your heirs’ creditors or from beneficiaries who may not be adept at money management.

• Privacy and probate savings. Probate is a matter of public record; a trust may allow assets to pass outside of probate and remain private, in addition to possibly reducing the amount lost to court fees and taxes in the process.

 

Inheritance Tax (Estate) Planning

​

Inheritance tax is paid on the value of the assets that a person leaves behind when they die. It can also apply to some gifts that are made before someone dies. 

​

If you are married, or have a civil partner, then you can leave your entire estate to your spouse or partner free of inheritance tax. But if you want to leave some or all of your estate to family and friends, then it may be liable for inheritance tax. But if the value of your estate is worth more than £325,000 (known as the ‘nil-rate band’), then HMRC will expect you to pay inheritance tax at a rate of 40% on the total value of assets in your estate over that amount. 

 

Your estate can include:

​

• Your house and any other properties you own.

• Any savings or investments (remember, some types of pensions are excluded from your estate, but other investments, including ISAs, are taxable).

• Any other assets.

• The value of any life insurance policies in your name. 

​

Regardless of your level of wealth, estate planning is a vital part of your overall financial plan. Planning ahead can give you greater control, privacy, and an opportunity to leave more of your legacy to your loved ones.

​

Contact Us today to find out more.

​

General information on Inheritance Tax and Estate Planning can be found at www.moneyadviceservice.org.uk​ - by clicking this link, you will open a new window of which Sapphire Wealth Management is not responsible for the content.