Inheritance Tax Retirement Planning

Posted on: 07 November 2008 by Gareth Hargreaves

Finance expert Jeremy Woodley looks at estate planning and explores ways to avoid related taxes.


Estate planning and reviewing Inheritance Tax (IHT) implications is often one of those things on your to do list that often gets left, or moved to another day. However, by embarking on a review of your position now will certainly provide a number of benefits and future safeguards.

Jeremy Woodley, UK Director of financial planning specialists The Fry Group delivers some recommendations for you to consider:

The very first thing I would recommend you looking at is developing a properly-structured Will. This will not only provide certainty of your assets but also creates opportunities to explore gifting to exempt bodies - i.e. charities who can receive funds through a Will without any tax implications to you or them.

Not only does a Will allow you to properly plan and let your family know your intentions, but it also enables you to explore some advantageous taxation benefits up front. It doesn’t have to be expensive and so I would recommend everyone to have a Will in place now, so you can rest assured that your assets will be dealt with how you wish and also ensure your next of kin are not left with an unmanageable tax bill.

Another tip is to consider marriage or civil partnerships. OK, so it’s not exactly the most romantic reason for getting married however there are huge benefits as a result. Zero inheritance tax is currently chargeable if you leave your Estate to a spouse or civil partner, so it is certainly worth considering.

One other method of avoiding IHT is, of course, to make significant gifts throughout life, which reduces the overall value of your Estate. Some gifts are subject to a ‘seven year rule’, whereby the individual must have taken receipt of the gift seven years or more before you pass away in order for it to be exempt, however there are others that are totally exempt. I would certainly recommend you seek specialist advice on this area.

Gifting to charities, for example to the national good and political parties, is completely exempt from tax. As such, the gift is deducted from the total estate before calculation of inheritance tax, therefore meaning if an estate is in excess of the nil-rate-band, or bands for a couple, it is possible to steer funds away from the Treasury to a worthy charity instead.

My final tip to suggest exploring is equity release from your property or assets. It is certainly an option for those individuals who are asset rich, yet cash poor. Although it is vital to receive personal advice on this area, particularly in terms of how you then direct the funds you release from your assets to make sure they work for you in the best possible way, and you reap maximum returns.

When it comes to estate planning, we always recommend that personal advice is sought to ensure all your circumstances are considered. An expert will review your personal finances, assets and preferences to ensure the very best outcome is realised for you and your family. That way, you can then concentrate on enjoying a comfortable standard of living, yet do not have the worries of any unnecessary financial concerns in your later years.

The level and basis of taxation are subject to change.

Jeremy WoodleyJeremy Woodley, UK Director, The Fry Group

Telephone: +44 (0)1903 231545

Web Links

The Fry Group: www.thefrygroup.co.uk

Are you arranging your financial affairs to leave your family the maximum inheritance? Are you spending your hard-earned money on yourself? Or with the credit crunch, is there precious little to pay the bills let alone leave to the next generation? Have you had problems dealing with someone else's will? You can share your views below or in the 50connect forum.

If you have a money question email connect@50connect.com and our financial adviser will offer some answers.

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