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Post-execution Considerations - Tax

By Stacy Taylor Written on:

At one time only the upper classes paid death duties. The ordinary man in the street never had to worry his head about such matters.

Unfortunately, the rise in home ownership coupled with the increase in house prices has led to a large increase in the number of estates paying tax. The Chancellor of the Exchequer fixes a starting point for inheritance tax in his annual budget. The amount below that starting point is referred to as your 'nil rate band'.

If your estate goes over that limit you will pay tax on the excess. The important thing to remember is that inheritance tax is by and large a voluntary tax; it is perfectly acceptable to write your will in such a way that the tax is reduced or eliminated.

The most basic form of tax planning for husband and wife is to set up discretionary trusts of your nil rate bands in each will. This ensures that you both take advantage of your nil rate bands.

Anything passing from one spouse to another is currently exempt from inheritance tax but passing everything to your spouse can lead to the accumulation of wealth in the survivor's estate. The resulting tax bill can be very big indeed. Where nil rate band trusts are set up the saving in tax can be substantial.


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see: Making a will - The Law Society. Please note that will making differs in Scotland and this website currently deals with English laFree Will download

 

Perhaps you might consider taking legal advice from a solicitor about making a will if any of the following apply to your circumstances:

 

  1. A number of people could make a claim on your estate when you pass away because they depend on yourself financially
  2. You want to include a trust in your will (perhaps to provide for children, to save tax, or simply protect your assets in some way after you become deceased)
  3. Your physical and permanent home is not in the UK and / or you are not a British citizen
  4. You live here in the UK but you have additional property abroad
  5. You own all or part of a UK business.
  6.  

see: Making a will - The Law Society. Please note that will making differs in Scotland and this website currently deals with English law.

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